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EGB/GILT: Bull Flattening

BOND SUMMARY

European govies have rallied this morning with core curves bull flattening.

  • Gilts yields are 2-4bp lower on the day, while the 2s30s spread is 2bp narrower. The Dec-20 gilt future has traded up toward the top of the day's range (L:136.00 / H: 136.26) and last printed 136.23.
  • Bunds are trading broadly in line with gilts. The curve is similarly 2bp flatter.
  • OAT yields have traded down 1-3bp. Last yields: 2-year -0.7039%, 5-year -0.6674%, 10-year -0.3168%, 30-year 0.3599%
  • BTPs have firmed, but have slightly underperformed core EGBs.
  • Supply this morning came from Germany (Bunds, EUR0.8974bn) and Portugal (OTs, EUR1.00bn).
  • Today's data slate has been relatively uneventful. The final Spanish CPI print for September was unchanged, while Eurozone industrial production for August was marginally below expectations (0.7% M/M vs 0.8% survey).

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