EGB/Gilt: Growth Concerns Linger

European government bonds have broadly traded firmer at the start the week while most regional equities are incrementally above the Friday close.

• Earlier today the PBOC cut the medium-term lending rate by 10bp to 2.75% amid further signs of slowing growth with industrial production, retail sales, fixed asset growth and property investment data all coming in below expectations for July.
• The Chinese data comes on the heels of last Friday's UK GDP data, which showed the economy sliding into recession in the second quarter.
• Gilts have started the week on a firm footing with yields down 2-5bp and the curve bull flattening.
• Bunds have similarly rallied with cash yields down 1-4bp.
• Much of the OAT curve has traded above the Friday close, although the short-end has weakened slightly.
• The BTP curve has twist flattened with the 2s30s spread narrowing 8bp,
• Supply this morning came from Germany (Bubills, EUR2.464bn allotted) and the Netherlands (DTCs, EUR2.44bn).