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EGB/Gilt - Unwinding Yesterday's Gains

BOND SUMMARY

European sovereign bonds have traded weaker this morning, retracing some of yesterday's gains.

  • Gilts yields are 2-3bp higher on the day with the curve 1bp steeper.
  • The bund curve has similarly bear steepened with the 2s30s spread 2bp wider.
  • OATs trade broadly in line with bunds.
  • BTPs have followed core EGBs lower with cash yields up 1-3bp.
  • Supply this morning came from the UK (Gilts, GBP4.75bn), Germany (Bobl, EUR3.328bn allotted) and Greece (Bills, EUR812.5mn).
  • Euro area services PMI prints for April were mixed. Germany and France came in slightly below expectations (with the former back in contraction territory), Italy missed by a wide margin (47.3 vs 50.0 consensus), while Spain surprised higher (54.6 vs 50.0),

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