June 30, 2022 10:38 GMT
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).