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EGB/GILT

BOND SUMMARY

European government bonds have rallied across the board this morning alongside broad G10 FX losses against the dollar and fresh downside for equities.

- Gilts have been well bid with cash yields 2-3bp lower and the curve trading close to flat overall.

- The bund curve has bull flattened with the 2s30s spread trading down 2bp.

- OATs have traded in line with bunds, with yields at the very long end down 3bp on the day.

- The Sep-20 BTP future trades at 147.26, towards the top end of the day's range.

- Supply this morning came from Italy (BTP/CCTeu, EUR7.25bn).

- Austria announced that it will tap the 0% Jul-24 RAGB and the 0% Feb-30 RAGB for E1.15bn at the Aug 4 auction.

- Data published this morning showed the German economy contracting 10.1% Q/Q in Q2 (compared to -9.0% consensus) while Spanish CPI for July came in below expectations (-0.7% Y/Y vs -0.2%) and regional prints for Germany suggest that the national CPI print will be weak.

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