EGB/Gilt: Further downside moves through yesterday's lows

After the sell-off of Friday and Monday appeared to stall in early European morning trading today, we have taken another leg lower since around 11:00GMT with gilts and Bunds now below yesterday's lows. There have been no new headline factors driving the sell-off with the global reflation trade continuing, the downside risks of Italian politics continuing to be priced-out and continued optimism over the medium-term impacts of the Covid vaccines all seen contributing to less risk aversion.

• We have seen very strong demand for the Italian dual-tranche syndication today with record books for the new 10-year BTP (over E110bln, exceeding the E107.9bln seen for the 10-year syndication in June and the E105.2bln for the 15-year syndication in January). There has also been strong demand for the new 30-year BTPei with books over E24bln (higher than the last linker syndication of the 10-year BTPei in October 2019). In addition, we have seen the 0.125% Jan-24 gilt and the 1.75% Jul-57 gilts sold via auction.
• The only notable data today saw Q4 GDP revised up by a tenth from the flash estimate while the German ZEW expectations survey also came in higher than consensus.
• Bund futures are down -0.28 today at 174.95 with 10y Bund yields up 1.6bp at -0.367% and Schatz yields up 0.5bp at -0.696%.
• BTP futures are down -0.18 today at 152.33 with 10y yields up 1.1bp at 0.537% and 2y yields up 1.4bp at -0.387%.
• OAT futures are down -0.29 today at 165.09 with 10y yields up 2.0bp at -0.136% and 2y yields down -0.2bp at -0.643%.