EGB/Gilt

European govies have broadly rallied this morning alongside a strong start to the year for equities.

• The gilt curve has flattened with the 2s10s spread 5bp narrower on the day.
• Bunds have similarly rallied at the longer end with yields broadly 2-4bp lower across much of the curve.
• The OAT curve has steepened sharply with the 2s30s spread trading down 8bp on the back of the short-end sell off and the longer end firming.
• BTPs have underperformed core EGBs with cash yields ~1bp lower.
• Final UK manufacturing PMI estimate for December was a touch better than the initial reading )57.5 vs 57.3) and slightly weaker for the Eurozone aggregate (55.2 vs 55.5). UK mortgage approvals for November came in above expectations (105.0k vs 83.5k survey).
• UK PM Boris Johnson and Health Secretary Matt Hancock continue to hint at the possibility of tougher social restrictions and potentially another full national lockdown following a surge in coronavirus infections.