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Correction Higher Extends

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Head And Shoulders Reversal

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EGB/Gilt: Sovereign FI Trades Weaker; Curves Steepen

BOND SUMMARY

European government bonds have sold off this morning alongside broad gains for equities and oil.

  • Gilts have recovered some of the earlier losses while still trading below yesterday's close. Cash yields are now up 5bp on the day.
  • The bund curve has bear steepened with yields up 1-6bp and the 2s30s spread widening 5bp.
  • OATs have traded out a similar path with the curve 5bp steeper.
  • BTPs have underperformed core EGBs with yields up 6-9bp .
  • Following on the heels of some notably hawkish commentary on rates from several GC members earlier in the week, the ECB's Mario Centeno today stated that monetary policy normalisation is necessary, but that patience and gradualism are required.
  • The disputed Northern Ireland protocol faced further pressure as the Democratic Unionist Party is refusing to nominate a speaker, which would paralyse Stormont and pressure the government in Westminster to resolve the protocol issue.
  • Supply this morning came from the UK (UKTBs, GBP2bn).
  • US import prices data and the University of Michigan survey update for May com into focus later today.
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European government bonds have sold off this morning alongside broad gains for equities and oil.

  • Gilts have recovered some of the earlier losses while still trading below yesterday's close. Cash yields are now up 5bp on the day.
  • The bund curve has bear steepened with yields up 1-6bp and the 2s30s spread widening 5bp.
  • OATs have traded out a similar path with the curve 5bp steeper.
  • BTPs have underperformed core EGBs with yields up 6-9bp .
  • Following on the heels of some notably hawkish commentary on rates from several GC members earlier in the week, the ECB's Mario Centeno today stated that monetary policy normalisation is necessary, but that patience and gradualism are required.
  • The disputed Northern Ireland protocol faced further pressure as the Democratic Unionist Party is refusing to nominate a speaker, which would paralyse Stormont and pressure the government in Westminster to resolve the protocol issue.
  • Supply this morning came from the UK (UKTBs, GBP2bn).
  • US import prices data and the University of Michigan survey update for May com into focus later today.