EGB/Gilt: Digesting The German Election & Intensifying UK Fuel Crisis

European sovereign bonds have sold off this morning while equities have edged higher.

• The narrowly fought German election and prospect of lengthy coalition negotiations to form the next government, coupled with the intensifying fuel crisis in the UK, is giving markets plenty to digest.
• Gilts have been under pressure this morning with cash yields now 1-4bp higher and the long-end of the curve underperforming.
• The bund curve has similarly bear steepened with the 2s30s spread 1bp wider.
• OATs have underperformed bunds with cash yields up 1-3bp on the day.
• BTPs have marginally underperformed core EGBs with yields pushing up 1-4bp and the belly of the curve leading the way.
• Supply this morning came from Germany (Bubills, EUR3.076bn allotted), the EU (NGEU Bond, EUR2.495bn) and Belgium (EUR3.502bn). Later today France will offer EUR5.7-6.9bn).
• There were no tier one European data releases this morning.
• There is a slew of ECB speakers today (Lagarde, Visco, Panetta and de Co) as well as BoE Governor Andrew Bailey.