EGB/Gilt - Q4 GDP Surprises & Vaccine Politics

Core European sovereign curves have bear steepened alongside soft weaker trading in periphery EGBs.

• Gilts have sold off with yields 1-5bp higher on the day and the 2s30s spread 4bp wider.
• Bunds trade in line with gilts with the curve 3bp steeper.
• BTPs have traded weaker with price action relatively contained so far. Yields are within 1bp of yesterday's close.
• German, French and Spanish GDP data for the fourth quarter came in better than expected.
• As speculation mounts on the possibility of the EU introducing restrictions on exports of Covid vaccines, the International Chamber of Commerce has warned Brussels that blocking exports would risk global retaliation that could undermine the wider vaccination effort.
• After the Novavax Covid vaccine was found to be nearly 90% effective in trials, the UK has secured 60m doses, which could partially mitigate the risk of disruptions to vaccines produced in the EU.
• Supply this morning came from the UK (Bills, GBP4.5bn).