EGB/Gilt: Norges Bank Hikes Again

European government bonds have continued to trade lower following yesterday's losses, while equities enjoy a modest relief rally.

• The Norges Bank hiked the deposit rate by 50bp to 1.75% as expected and indicated that the policy rate will "most likely be raised further in September".
• The ECBs Martins Kazaks earlier stated that policy rates would continue to move higher to slow inflation. His remarks come amid mounting evidence from leading indicators which point towards a broad slowdown in economic activity across the euro area.
• Gilts have progressively edged lower through the morning with cash yields now up 2-3bp on the day.
• Bunds sold off early into the session before starting to reclaim lost ground. Yields are now broadly 3-6bp higher across the curve, although the very long end trades close to flat on the day.
• OAT yields are up 1-3bp with the belly of the curve slightly underperforming.
• The BTP curve has flattened with the 2s30s spread narrowing 6bp.
• Supply this morning came from France (OATs, EUR6.0bn & Linkers EUR1bn).
• Focus now shifts to US initial jobless claims data and the lastest Philly Fed Business Outlook update later today.