May 10, 2022 10:58 GMT
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).