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EGB/Gilt: UK CPI Surprises Higher

BOND SUMMARY

European sovereign bonds have traded mixed this morning and are broadly weaker on the day. Equities have inched lower, while the dollar is on the back foot against global FX,

  • UK inflation for August came in above expectations (3.2% Y/Y vs 2.9% survey). Elsewhere, Eurozone industrial production growth accelerated to 7.7% Y/Y vs 6.0% expected.
  • Gilts opened lower, but gradually recovered losses to trade within sight of yesterday's close.
  • Bunds have lacked direction and trade close to flat on the day.
  • OATs initially traded weaker, but similarly returned towards yesterday's close.
  • BTPs have sold off with cash yields broadly 2bp higher.
  • The ECB's Isabel Schnabel and Philip Lane are due to speak later today.
  • Supply this morning came from the UK (Gilts, GBP2.50bn) and the EU (Bills, EUR4.996bn).

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