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EGB/Gilts: Under Pressure

BOND SUMMARY

European sovereign bonds have traded weaker this morning against a mixed backdrop for equities and FX.

  • Gilts have significantly underperformed EGBs with cash yields broadly 5bp higher on the day.
  • Bunds and OATs trade in line with yields pushing up 1-2bp.
  • BTPs have also traded weaker, but have lagged the move in core EGBs. Cash yields are within 1bp of yesterday's close, with the curve only marginally steeper.
  • German trade data for August was weaker than expected with the trade balance coming in at EUR10.7bn vs EUR15.0bn expected.
  • Supply this morning came from the UK (UKTBs, GBP2bn).
  • The ECB's Fabio Panetta is due to speak later today, while ECB President Christine Lagarde and US Treasury Secretary Janet Yellen will speak at a B20 event in Italy.

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