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EGB/Gilt: Gearing Up For The ECB

BOND SUMMARY

European government bonds trade relatively mixed as the market gears up for a slew of central bank policy meetings. The ECB has strongly signaled that its policy instruments will be re calibrated at the December meeting, although uncertainty around inflation risks and Omnicron have complicated matters.

  • The gilt curve has slightly steepened on the back of the short-end outperforming with the 2s30s spread widening by 1bp.
  • The bund curve has conversely flattened as the short-end pushes lower. The 2s30s spread is 2bp wider.
  • The OAT curve has flattened sharply with the 2s30s spread trading down 4bp on the back of short-end selling.
  • BTPs have firmed across the curve with cash yields 1-2bp lower on the day.
  • Supply this morning came from Germany (Bubills, EUR3.146 allotted) and the Netherlands (DTCs, EUR1.7bn).
  • Austria announced its 2022 funding programme which targets EUR60-65bn of issuance with RAGBs being around EUR40bn. 3-4 syndications are also expected.
  • The European data calendar was light this morning.

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