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EGB/GILTS

BOND SUMMARY

Following a weak start, European govies rallied from mid-morning alongside soft trading in equities.

  • The gilt curve has bull steepened following yesterday's BoE meeting in which the possibility of negative policy rates in the next downturn was hinted at. Cash yields are 1-2bp lower on the day.
  • Bunds have similarly firmed with marginal outperformance in the belly. Last yields: -0.7129%, 5-year -0.7099%, 10-year -0.5069%, 30-year -0.0658%.
  • BTPs have clawed back early losses and now trade close to unch on the day.
  • Supply this morning came from the UK (bills, EUR2.25bn).
  • UK retail sales data for August came in marginally above expectations (Ex auto, 4.3% Y/Y vs 4.2% survey). Elsewhere, Italian industrial production increased 8.1% M/M in July, down from a sharper 13.4% surge the previous month.
  • MNI has published its ECB Review for September, which is available online and by email.

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