EGB/Gilt

European govies have broadly sold off this morning and curves have bear steepened alongside gains for equities and commodities. The inflation theme continues to gain ground with breakevens and inflation swaps reflecting a gradual repricing of market expectations.

• Gilts sold off sharply at the open and remain offered, with the long-end underperforming. The curve is 3-4bp steeper on the day.
• Bunds have similarly traded weaker with yields 1-3bp higher.
• OATs trade in line with bunds. Last yields: 2-year -0.6446%, 5-year -0.600%, 10-year -0.2087%, 30-year 0.5524%.
• BTPs have bucked the trend and inched higher. Yields are now within 1bp of the Friday close.
• Concerns remain around the effectiveness of the AstraZeneca vaccine against the South African variant of the coronavirus. Although the UK government has downplayed concerns, a new study suggests that the vaccine may only be 10% effective against the South African variant.
• Supply this morning came from Germany (T-Bills, EUR3.68bn).
• The European data calendar was relatively light this morning.