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EGB/Gilt - Germany and Europe underperforms

  • It has been a very low volume start with most investors on the sideline, nothing too surprising, given a packed week ahead, with speakers (ECB Forum starting later), and some inflation data from Germany on Wednesday and EU CPI on Friday.
  • The low liquidity, has nonetheless provided for another decent range session.
  • Bund has traded in a 179 ticks, but with under 500k lots at the time of typing.
  • Peripheral spread are still mixed this afternoon against the German 10yr.Greece is 3bps tighter, while Portugal trades 1.3bps tighter.
  • Gilt outperform Bund, bring the 10yr spread 2.7bps tighter for the session, but well within past ranges.
  • Looking ahead, ECB forum welcome remarks from Christine Lagarde, but more likely to hear more tomorrow with ECB Lagarde, Lane, Elderson, Panetta, BoE Cunliffe and Fed’s Daly all scheduled to speak.
  • Gilt futures are down 82 at 113.15.
  • Bund futures are down -1.57 today at 146.37 with 10y Bund yields up 10.3bp at 1.540% and Schatz yields up 8.2bp at 0.876%.
  • BTP futures are down -1.20 today at 120.61 with 10y yields up 8.3bp at 3.520% and 2y yields up 6.1bp at 1.440%.
  • OAT futures are down -1.32 today at 137.02 with 10y yields up 10.8bp at 2.076% and 2y yields up 7.1bp at 0.730%.

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