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EGBs-GILTS: Core Weaker On Supply, Equity Strength

BOND SUMMARY

Bunds and Gilts have started the month weaker, and periphery spreads tighter ahead of French and Spanish supply - with stocks heading higher largely on US fiscal stimulus hopes.

  • Eurozone manuf PMIs have featured in Spain (slight beat) and Italy (slilght miss), with less-impactful French, German, and Eurozone finals afterwards. Also ECB's Lane speaks at 1645BST (de Cos speaking now, citing risks to the downside for growth). Spain sells up to E4.75bln of SPGBs while France sells up to E11.5bln of OATs.
  • In the UK, final Sep PMI (0930BST), BoE Haldane appearances (1120BST and 1600BST) feature, alongside the 3rd day of the latest round of Brexit FTA talks. DMO sells up to GBP5.25bln of Gilts.
  • Re EU-UK talks, GBP sold off sharply on a Rtrs sources story that the two sides had failed to close differences on state aid thus far; Gilts were unaffected (similar stories were out earlier).

Latest levels:

  • Dec Bund futures (RX) down 15 ticks at 174.37 (L: 174.19 / H: 174.55)
  • Dec Gilt futures (G) down 18 ticks at 135.93 (L: 135.73 / H: 135.97)
  • Dec BTP futures (IK) up 16 ticks at 147.74 (L: 147.58 / H: 147.94)
  • Italy / German 10-Yr spread 1.1bps tighter at 137.7bps

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