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European sovereign bonds have broadly firmed this morning while equities trade mixed.

  • The gilt curve has bull flattened with the 2s30s spread 2bp narrower.
  • German bond yields are 1-2bp lower on the day with the curve similarly a touch flatter.
  • It is a similar story for OATs, which trade in line with bunds.
  • BTPs also trade in line with core EGBs. Cash yields are 1-2bp lower this morning.
  • UK CPI pushed up to 2.1% Y/Y for May, eating the 1.8% consensus. Core CPI pushed up to 2.0% Y/Y and against exceeded expectations (1.5%).
  • Supply this morning came from the UK (Gilts, GBP2.5bn), Germany (Bunds, EUR4.085bn allotted), Portugal (BTs, EUR1.25bn). Italy also conducted a tap issuance for specialists (EUR504mn of the 3.00% Aug-29 BTP and EUR971mn of the 5.25% Nov-29 BTP).