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EGB/Gilt: Global factors driving higher

BONDS

Covid cases (particularly the lockdown in New Zealand) and geopolitical events in Afghanistan are weighing on sentiment in Europe today. Bunds and gilts are both above yesterday's highs.

  • Peripheral spreads have widened, with BTP and Spanish 10-year spreads around 1.0bp wider on the day.
  • We have seen GBP2.0bln of the 25-year 0.875% Jan-46 gilt sold in a strong auction and also the strongest Schatz auction for over three months with the launch of the 0% Sep-23 Schatz for E6bln.
  • We have already received UK labour market data which had something for everyone, and was largely in line with expectations while the second print of Eurozone GDP was in line with the first.
  • Bund futures are up 0.28 today at 177.08 with 10y Bund yields down -2.1bp at -0.491% and Schatz yields down -0.5bp at -0.748%.
  • Gilt futures are up 0.36 today at 130.16 with 10y yields down -4.0bp at 0.533% and 2y yields down -2.1bp at 0.116%.
  • BTP futures are up 0.08 today at 155.15 with 10y yields down -1.1bp at 0.553% and 2y yields down -0.3bp at -0.496%.
  • OAT futures are up 0.19 today at 162.54 with 10y yields down -2.0bp at -0.144% and 2y yields down -0.5bp at -0.714%.

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