EGB/Gilt: Risk-On Start To The Week

Markets have shifted to a distinctly more risk-on posture at the start of the week with European sovereign yields pushing higher, equities and commodities rallying, and G10 FX posting gains against the dollar.

• Gilts have had a relatively choppy session and currently trade below Friday's close with cash yields 3-4bp higher.
• Bunds have sold off through the morning with yields up 6-8bp.
• OATs have similarly pushed steadily lower with yields up 6-9bp.
• BTPs have underperformed core EGBs, particularly in the belly of the curve with yields pushing up 5-11bp.
• Focus this week will be on the ECB meeting this Thursday. A 25bp hike is firmly penciled in, with markets looking for guidance on the rate path from September onward and a new anti-fragmentation tool.
• Following a testy televised debate on Sunday among the main candidates to replace UK PM Boris Johnson, Conservative MPs will vote today to eliminate one more candidate and reduce the shortlist to four. Sky News has reported that it will cancel tomorrow's planned televised debate after Rishi Sunak and Liz Truss pulled out.
• Supply this morning came from Germany (Bubills, EUR2.6302bn allotted), the Netherlands (DTCs, EUR2.04bn) and Belgium (OLOs, EUR3.652bn). Later today France will offer EUR4.7-6.3bn of BTFs.
• The European data slate was light this morning with no tier one releases.