EGB/Gilt: Risk-On

Markets have started the week on a risk-on setting with the dollar on the backfoot against G10 FX, oil rallying, equities inching higher and core European sovereign bonds selling off.

• The Oxford-AstraZeneca vaccine has performed better than expected in phase 3 trials, adding to the positive momentum from the recent Pfizer and Moderna vaccine announcements.
• Supply this morning came from Germany (Bubills, EUR2.58bn allotted) and Belgium (OLOs, EUR1.494bn). France will sell a combination of 3-/6-/12-month BTFs this afternoon for EUR5.8-7.0bn).
• European preliminary PMI data for November confirmed the a slowdown in economic activity, albeit with manufacturing appearing to fare a little better. The UK performed markedly better with the manufacturing print reading 55.2 vs 50.5 survey and services reading 45.8 vs 42.8 expected.
• Gilts have sold off with yields 1-2bp lower and the curve close to flat.
• Bunds have similarly traded weaker. Last yields: 2-year -0.7622% 5-year -0.7641%, 10-year -0.5804%, 30-year -0.1673%.
• The OAT curve has steepened slightly on the back of the short end trading firmer and yields drifting higher at the longer end. The 2s30s spread is 2bp wider on the day.