EGB/GILTs Sell-Off Following Vaccine Announcement

Following the risk-positive Pfizer Covid vaccine announcement last week, Moderna Inc has announced that its vaccine is 94.5% effective, providing a lift for equities and underpinning the bear steepening of European sovereign curves.

• Gilts have sold off with case yields 4-5bp higher across the curve.
• Bunds have similarly traded weaker with yields pushing up 1-3bp.
• OATs trade broadly in line with bunds.
• BTPs started the session on a stronger footing, but have since traded weaker and now returning to Friday's closing levels.
• Supply this morning came from Germany (Bubills, EUR2.595bn allotted) and Slovakia (SlovGBs, EUR362mn). Later today France will auction a combination of 3-/6-/12-month BTFs for EUR5.6-7.3bn.
• The data calendar has been light this morning with no tier one releases.
• Speaking at Euro Finance Week, the ECB''s Guindos argued that tackling structural weaknesses in the banking sector was urgent, although he sounded relatively more sanguine on the impact of a possible no-deal Brexit.
• Following last week's internal ructions that led to the departure of Dominic Cummings, any attempt to return to normal has been set back after PM Boris Johnson was told to self-isolate after a Conservative MP developed Covid symptoms.