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EGB/Gilt: UK Wages Show Limited Second-Round Effects

BOND SUMMARY

European government bonds have edged lower this morning while equities have made gains G10 currencies have weakened against the dollar.

  • UK employment data was somewhat mixed this morning. The 3m/3m employment gain data for June was lower than expected (160k vs 268k consensus), while the more timely change in payrolled employees was higher than expected in July (73k vs 25k survey). Average earnings surprised higher in June (5.1% Y/Y vs 4.5%), but continue to be outstripped by inflation.
  • Gilts have recovered some of the earlier losses while continuing to trade below yesterday's close. Cash yields are now 1-2bp higher across the curve.
  • The bund curve has steepened on the back of the longer end selling off with 2s30s widening 3bp.
  • OATs have traced out a similar path with the 2s30s spread trading up 3bp.
  • BTPs have underperformed core EGBs. Yields are 4-7bp higher on the day with the curve bear flattening.
  • Supply this morning came from the UK (Gilts, GBP2.75bn), Germany (Bobl, EUR3.242bn), Spain (Letras, EUR1.703bn), Finland (RFTBs, EUR1.496bn) and the ESM (Bills, EUR1.1bn).
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European government bonds have edged lower this morning while equities have made gains G10 currencies have weakened against the dollar.

  • UK employment data was somewhat mixed this morning. The 3m/3m employment gain data for June was lower than expected (160k vs 268k consensus), while the more timely change in payrolled employees was higher than expected in July (73k vs 25k survey). Average earnings surprised higher in June (5.1% Y/Y vs 4.5%), but continue to be outstripped by inflation.
  • Gilts have recovered some of the earlier losses while continuing to trade below yesterday's close. Cash yields are now 1-2bp higher across the curve.
  • The bund curve has steepened on the back of the longer end selling off with 2s30s widening 3bp.
  • OATs have traced out a similar path with the 2s30s spread trading up 3bp.
  • BTPs have underperformed core EGBs. Yields are 4-7bp higher on the day with the curve bear flattening.
  • Supply this morning came from the UK (Gilts, GBP2.75bn), Germany (Bobl, EUR3.242bn), Spain (Letras, EUR1.703bn), Finland (RFTBs, EUR1.496bn) and the ESM (Bills, EUR1.1bn).