EGB/Gilt: Bull Flattening

European sovereign bonds have rallied this morning while equities have sold off.

• Gilts have traded higher with cash yields 2-3bp lower across the curve.
• The bund curve has bull flattened with the 2s30s sread 3bp narrower on the day.
• The long-end of the OAT curve has similarly outperformed.
• BTPs have slightly underperformed core EGBs with yields edging down 1-2bp.
• Supply this morning came from Germany (Bubills, EUR5.889mn), Netherlands (DTCs, EUR2.17bn), Slovakia (SlovGBs, EUR293mn).
• The European data calendar was light this morning.
• UK Business Secretary Kwasi Kwarteng will be holding talks with energy companies today as the impact of surging gas prices intensifies.
• The diplomatic fallout from the US-UK-Australia AUKUS pact has continued over the weekend. France has recalled its ambassadors from the US and Australia and has pulled out of scheduled bilateral defence talks with the UK. Given the response from Paris, further political/diplomatic ramifications are likely.