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EGB/Gilt: Back To Risk


Markets are back in risk-on mode this morning with equities pushing higher, oil rallying and sovereign FI selling off.

  • Gilts are underperforming EGBs with cash yields 4-10bp and the curve bear flattening. The 2s30s spread 5bp narrower.
  • Bund yields are 2-4bp higher on the day.
  • OATs have similarly edged lower with yields 1-5bp higher and the belly of the curve underperforming.
  • BTPs have underperformed core EGBs with the belly of the curve similarly leading the charge.
  • The OECD has warned that the Omicron variant risks exacerbating supply constraints and inflation. The warning follows this week's consensus busting inflation prints for Germany, France and Italy.
  • Final European PMI prints for November were broadly in line with the initial estimates and point to a sustained expansion in output.
  • Supply this morning came from the UK (Gilts, GBP2.25bn), Germany (Bobl, EUR2.464bn allotted), Greece (T-Bills, EUR625mn) and the EU (Bills, EUR2.991bn).

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