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EGB/GILT

BOND SUMMARY

Markets trade mixed this morning with gilts weaker, EGBs firmer, equity performance uneven and the dollar inching up against G10 FX. Despite the chaotic scenes on Capitol Hill yesterday, outgoing US President Donald Trump has indicated that there will be an 'orderly transition' which should defuse the tail risk of a more conflict-ridden hand over of power.

  • Gilts sold off early into the session but quickly regain composure with yields now within 1bp above yesterday's closing levels.
  • The bund curve has marginally bull flattened with the 2s10s spread 1bp narrower on the day.
  • OATs have slightly outperformed bunds with longer end yields down 2bp.
  • BTPs are a touch firmer with yields 1-2bp lower.
  • Supply this morning came from France (OATs, EUR10.995bn) and Spain (Obli/Bono, EUR5.54bn).
  • Eurozone retail sales data for November missed (-2.9% Y/Y vs 0.9% survey) while the flash CPI estimate for December printed in line (-0.3% Y/Y).

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