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EGB/Gilt

BOND SUMMARY

European sovereign bonds have rallied this morning and curves have bull flattened alongside weaker trading in equities.

  • Brexit tension continues to mount as both sides continue to warn of the difficulty in getting a deal over the line in the coming days. The EU's chief Brexit negotiator Michel Barnier sressed that he 'cannot guarantee' a trade deal. Cable has been under pressure this morning, losing 1.4% on the day.
  • Gilts have outperformed with EGBs, particularly at the longer end. Cash yields are 3-6bp lower on the day.
  • The bund curve has bull flattened with the 2s30s spread 2np narrower.
  • OATs have firmed with cash yields 1-3bp lower.
  • BTPs have similarly edged higher with yields 1-2bp lower on the day.
  • Supply this morning came from Germany (Bubills, EUR1.285bn allotted). France will sell 3-/6-/12-month BTFs for EUR5.2-6.4bn.
  • The European data calendar was light this morning.

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