Bund Outperformance The General Theme In Europe, Excluding GGBs

Very modest German outperformance amongst 10-Year core & semi-core EGBs (excluding Dutch paper), as well as Gilts, remains the theme of the day, with the firmer than expected run of UK labour market data and related hawkish BoE repricing putting the 10-Year Gilt/Bund spread on target to close above 200bp for the first time since the aftermath of last year’s UK mini-budget fiasco. Peripherals have also generally widened a touch vs. Bunds at the 10-Year point, although Greece has bucked the broader trend as yesterday’s knee-jerk widening reaction to the lack of ratings action from Fitch allows those with a tightening bias to enter at slightly more attractive levels than the recent cycle tights.