EGB/Gilt: Still Offered

European government bonds traded weaker from the open and, despite paring back earlier losses, EGBs/Gilts continue to trade below yesterday's close. Equities have rallied across the board, while FX performance against the USD has been mixed.

• Having initially opened lower, gilts have recovered some of the earlier losses with cash yields now 1-3bp higher on the day and the curve bear flattening.
• Bunds have traded in a similar fashion following the initial leg lower. The 2s30s spread is now 2bp narrower.
• OAT yields are 1-2bp higher across much of the curve.
• BTPs have underperformed core EGBs on the day with yields up 2-4bp.
• The final estimate of Q3 GDP for the euro area was inline with the initial print in Q/Q terms (2.2%) and was a touch higher in Y/Y terms (3.9% vs 3.7% previously). German industrial production for October came in stronger than expected (2.8% M/M vs 1.0% survey, -0.6% Y/Y vs -2.9% expected).
• Supply this morning came from the UK (Gilts, GBP1.5bn), Germany (Schatz, EUR3.277bn allotted), Spain (Letras, EUR4.539bn), the Netherlands (DSL, EUR2.1bn) and Belgium (TCs, EUR1bn).
• There are no European central bank speakers lined up for today and a light US data slate this afternoon.