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EGB/Gilt: Sovereign FI Bid

BOND SUMMARY

European sovereign bonds have rallied across the board this morning alongside gains for equities in what appears to be a reversal of yesterday's moves.

  • There is little to suggest a major inflexion point at this stage given that there have been no obvious catalysts to alter the outlook for weaker growth and higher inflation, which remains the dominant theme.
  • Gilts have traded higher and the curve has bull flattened. Yields are now 6-8bp lower with the curve 2bp flatter.
  • Bunds have underperformed gilts on the day with cash yields down 3-4bp.
  • OATs trade broadly in line with bunds, while the curve is close to flat.
  • BTPs have outperformed core EGBs with yields down 6-8bp.
  • Supply this morning came from the UK (Green Gilt, GBP2.25bn), Germany (Bobl, EUR2.414bn allotted), Spain (Letras, EUR1.876bn), Austria (RAGB, EUR1.38bn), Belgium (TCs, EUR3.206bn), and Finland (RFTBs, EUR1.585bn).
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European sovereign bonds have rallied across the board this morning alongside gains for equities in what appears to be a reversal of yesterday's moves.

  • There is little to suggest a major inflexion point at this stage given that there have been no obvious catalysts to alter the outlook for weaker growth and higher inflation, which remains the dominant theme.
  • Gilts have traded higher and the curve has bull flattened. Yields are now 6-8bp lower with the curve 2bp flatter.
  • Bunds have underperformed gilts on the day with cash yields down 3-4bp.
  • OATs trade broadly in line with bunds, while the curve is close to flat.
  • BTPs have outperformed core EGBs with yields down 6-8bp.
  • Supply this morning came from the UK (Green Gilt, GBP2.25bn), Germany (Bobl, EUR2.414bn allotted), Spain (Letras, EUR1.876bn), Austria (RAGB, EUR1.38bn), Belgium (TCs, EUR3.206bn), and Finland (RFTBs, EUR1.585bn).