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EGB/Gilt

BOND SUMMARY

Markets have shifted to a risk-off posture this morning with core govies rallying, periphery EGBs trading weaker, equities broadly lower and the US dollar gaining ground against G10 FX.

  • Gilts have rallied and outperformed European majors with longer end yields now down 3bp on the day.
  • Bunds opened weaker but have firmed through the morning and now trade marginally above yesterday's close.
  • BTPs have sold off and the curve has slightly bear steepened with the 2s30s spread 2bp wider.
  • Mirroring a similar trend seen in the euro area, UK CPI pushed higher in January and came in above expectations (0.7% vs 0.6% survey).
  • Supply this morning came from the UK (Gilt, GBP2.5bn), Germany (Bund, EUR 1.2324bn allotted), and Portugal (BTs, EUR1.25bn).

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