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EGB/Gilt: Riksbank Delivers 50bp Hike

BOND SUMMARY

European government bonds have rallied this morning alongside a broad sell-off in stocks.

  • The Riksbank raised the main policy rate by 50bp to 0.75%, in line with expectations. The central bank's forecast for the policy rate was also revised higher and will be close to 2% at the start of next year.
  • The UK reported the largest current account deficit on record of GBP51.7bn during the first quarter widening from GBP7.3bn in the final quarter of 2021.
  • The gilt curve has twist steepened with the 2s30s spread trading up 7bp.
  • Bunds have rallied with the curve bull steepening. Cash yields are down 8-15bp on the day.
  • It is a similar story for OATs where the long end of the curve is 4bp steeeper.
  • BTPs have underperformed core EGBs with yields down 2-6bp on the day.
  • Supply this morning came from Italy (BTP, EUR7bn).
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European government bonds have rallied this morning alongside a broad sell-off in stocks.

  • The Riksbank raised the main policy rate by 50bp to 0.75%, in line with expectations. The central bank's forecast for the policy rate was also revised higher and will be close to 2% at the start of next year.
  • The UK reported the largest current account deficit on record of GBP51.7bn during the first quarter widening from GBP7.3bn in the final quarter of 2021.
  • The gilt curve has twist steepened with the 2s30s spread trading up 7bp.
  • Bunds have rallied with the curve bull steepening. Cash yields are down 8-15bp on the day.
  • It is a similar story for OATs where the long end of the curve is 4bp steeeper.
  • BTPs have underperformed core EGBs with yields down 2-6bp on the day.
  • Supply this morning came from Italy (BTP, EUR7bn).