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EGB/Gilt: Risk On

BOND SUMMARY

Following the relatively upbeat message about the economy from the FOMC yesterday (making progress on employment and inflation, while still highlighting that there is further to go), markets have turned distinctly risk on this morning. Sovereign curves bear steepening, equities are pushing higher and the dollar is on the back foot against G10 FX.

  • Gilts have sold off with yields 2-3bp higher and the curve marginally steeper.
  • The bund curve has similarly steepened with the 2s30s spread 2bp wider.
  • OATs have slightly underperformed bunds with yields broadly 1bp higher across the curve.
  • Regional German CPI data for July surged sharply to 3.4-4.3% YY, setting up a strong national print, which will be published at 1300BST.
  • Supply this morning came from Italy (BTPs, CCTeu, EUR7.75bn).

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