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EGB/Gilt: Risk Off Buying

BOND SUMMARY

European government bonds have rallied this morning alongside a broad sell off in equities and some downside for oil.

  • Gilts opened higher and have managed to hold on to most of the early gains. Cash yields are 1-3bp lower with the belly of the curve marginally outperforming on the day.
  • Bunds have outperformed gilts particularly at the longer end. Yields are 2-4bp lower with the curve 2bp flatter.
  • The OAT curve has similarly bull flattened with the 2s30s spread narrowing 2bp.
  • BTPs have slightly underperformed core EGBs with yields now down 1-2bp.
  • UK retail sales data missed by a wide margin in December with the Ex Auto series falling 3.0% Y/Y vs + 1.1% Y/Y consensus.
  • Supply this morning came from the UK (UKTBs, GBP2bn),
  • The ECBs Christine Lagarde is due to speak later today on a panel concerning the global economic outlook at an event organised by the World Economic Forum. The BoE's Chartherine Mann is also scheduled to speak about the economic outlook.
MNI London Bureau | +44 0203-865-3808 | bruce.jeffery@marketnews.com
MNI London Bureau | +44 0203-865-3808 | bruce.jeffery@marketnews.com

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