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EGB/Gilt- US Leads Bonds lower

BONDS
  • EGBs and Bund have fully reversed the early European rally this afternoon.
  • Some of the selling was triggered pre US Data, and led by some squaring in Equities.
  • US JOLTs and ISM manufacturing beat, pushed Equities and Govies lower this afternoon.
  • But EGBs and Bund still hold onto small gains and trade in the green at the time of typing.
  • Peripheral spread are tighter with Greece and Portugal leading versus the German 10yr, by 3.2bps and 1.6bps respectively.
  • It was another volatile session for Gilts, after a punchy upside open, the contract is at session low, and trading circa flat this afternoon.
  • Gilt/Bund spread was tighter on the Gilt open, but sits 1.8bp wider at the time of typing.
  • Looking ahead all the attention turns to the FOMC tomorrow, and given the data today a Dovish tilt will could be misplaced.

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