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EGB/Gilt - Perceived Reduction In Scottish Referendum Risk Boosts GB Sentiment

BOND SUMMARY

It has been a mixed start to the week with gilts selling off and EGBs initially trading weaker before reclaiming early losses.

  • The failure of the SNP to secure a parliamentary majority in the Scottish elections has been perceived as lowering the probability of a fresh independence referendum, and in turn has underpinned the gilt sell off and cable rally.
  • Gilt yields are 1-2bp higher on the day with the curve bear steepening.
  • Bunds opened weaker but have gradually paired losses to trade flat on the day.
  • OATs have followed a similar course while trading above the Friday close.
  • BTPs have firmed with yields 1bp lower.
  • Supply this morning came from Germany (Bubills, EUR3.901bn allotted) and Finland (RFTBs, EUR1.962bn)

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