EGB/Gilt: Risk-On Driving Govies Lower

European sovereign curves and have bear steepened and equities are broadly higher in a characteristically risk-on move.

• Preliminary PMI data point to a sustained expansion in economic activity in August. Even in the UK, where the services PMI missed by a significant margin (55.5 vs 59.1 survey), the data nonetheless indicates that the economic recovery is still underway.
• Gilts have traded weaker from the open cash yields 2-3bp higher on the day and the curve 1bp steeper.
• Bunds have marginally underperformed gilts with yields at the very long end up 4bp.
• It is a similar story for OATs where the 2s30s spread has widened by 3bp.
• BTPs have underperformed core EGBs with yields pushing up 2-5bp across the curve.
• Supply this morning came from Germany (Bubills, EUR3.045bn allotted). Later today France will offer EUR3.9-5.5bn of BTFs.