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Core EGBs Rally on Equity Spiral

BOND SUMMARY
  • Core EGBs trade solidly, in sympathy with Treasuries which have responded to Manchin's single-handed tanking of Biden's flagship Build Back Better policy proposals. Concerns remain further elevated that governments could impose stricter Covid-19 restrictions across the UK and Europe (and the announcement of the Dutch lockdown), which continue to work in favour of core fixed income.
  • The UST curve has steepened, with larger moves having been seen at the short-end. Eurodollar Reds/Greens are all higher as some future Fed hikes are pushed further out in expectation of a lower level of government spending.
  • A similar steepening has been seen in the gilt curve, but more due to rate hike expectations being pushed back due to concerns about a post-Christmas lockdown, with a number of newspapers talking up the options ministers are said to be discussing this morning.
  • The German curve has bull flattened a little, in contrast. 10-year Bunds have moved in line with 10-year gilts but with little expected in terms of near-term hikes, Schatz yields have moved less. Peripheral spreads,particularly BTP-Bund spreads, have widened a little.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
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MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Homepagemarkets-real-timeBulletMarketsFixed Income Bullets

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