EGB/Gilt - Reversed yesterday's rallies

EGBs and Bund have reversed yesterday's rallies, with futures extending lower after US IP beat expectations.

• One point from the IP report is that, in signs of continued supply side pressures, capacity utilisation of 80.3% (cons 80.2%) poked to a new post-pandemic high. In unrounded terms at 80.27, it’s just off a high of 80.31 last seen in Aug’18 and prior to that not seen since 2008.
• BTP led Europe lower, as politics concerns have kept the lid on the BTP.
• BTP/Bund spread has widened by another 9bps, to 215.00bps.
• Upside target is seen further out, at the August high 222.53bps.
• Gilt outperform Germany, and the Gilt/Bund spread is 1.7bps wider, and edging to widest level since the 23rd March.
• Looking ahead, attention turns to tomorrow with UK CPI, EU GDP, US retail sales set to be released.
• Sep Bund futures (RX) down 139 ticks at 155.31 (L: 155.31 / H: 156.78)
• Germany: The 2-Yr yield is up 6.5bps wise.. at 0.595%, 5-Yr is up 8.7bps at 0.765%, 10-Yr is up 10bps at 1%, and 30-Yr is up 10.3bps at 1.258%.
• Sep Gilt futures (G) down 113 ticks at 115.83 (L: 115.83 / H: 116.99)
• UK: The 2-Yr yield is up 12.9bps at 2.161%, 5-Yr is up 11.8bps at 1.973%, 10-Yr is up 12.2bps at 2.139%, and 30-Yr is up 10.3bps at 2.538%.
• Sep BTP futures (IK) down 205 ticks at 126.46 (L: 126.45 / H: 128.53)
• Sep OAT futures (OA) down 126 ticks at 144.35 (L: 144.34 / H: 145.69)
• Italian BTP spread up 9.8bps at 217.3bps
• Spanish bond spread up 2.1bps at 112.7bps
• Portuguese PGB spread unchanged at 101.4bps
• Greek bond spread up 6.3bps at 235.2bps