EGB/Gilt - PD Ructions, Vaccine Politics

European government bonds have traded broadly weekly alongside downside for equities and gains for the US dollar.

• The gilt curve has bear flattened with the cash yields 1-3 bp higher and the 2s30s spread 2bp narrower.
• Bunds opened weaker, but gradually clawed back early losses while still trading lower on the day. Cash yields are broadly 1-2bp higher.
• The OAT curve has bear steepened with the 2s30s spread 3bp wider.
• BTPs similarly traded weaker early into the session and have slowly recovered some losses. Last yields: 2-year -0.3374%, 5-year 0.0906%, 10-year 0.7404%, 30-year 1.685%.
• Fractures have started to emerge in Mario Draghi's government after head of Italy's PD, Nicola Zingaretti, resigned last night. Although the government holds a commanding majority in both house of parliament, it is clear that there is still some divisions over the technocratic administration.
• France's Health Minister Olivier Veran supported Italy's decision to ban the export of some Oxford/AstraZeneca Covid vaccines to Australia as the EU's vaccination drive continues to struggle.
• German factory orders for January came in better than expected (2.5% Y/Y vs 1.9% survey).
• Supply this morning came from the UK (Bills, GBP3.5bn).