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EGBs-GILTS: Another Day, Another Long-End Rally

BOND SUMMARY

Long-end Bunds and Gilts are rallying again, with periphery spreads moving noticeably wider for the 2nd consecutive session Thursday.

  • Risk aversion is a little clearer today than in previous sessions where assets were mixed; Stocks are sharply lower with all major European futures/indices -1% or more, with materials / financials performing worst. Industrial commodities sharply lower.
  • Big bull flattening in the curves; German 2s30s and 5s30s hit lowest since early March.
  • With little key data, ECB strategy review results are in focus at 1200BST, with press conference incl Lagarde at 1330BST.
  • U.K.'s Shapps unveils travel rule changes at 1130BST.
  • Ireland auctions up to E1.5bln of IGBs.

Latest levels:

  • Sep Bund futures (RX) up 45 ticks at 174.47 (L: 174.09 / H: 174.55)
  • Sep Gilt futures (G) up 26 ticks at 129.7 (L: 129.61 / H: 129.81)
  • Sep BTP futures (IK) up 7 ticks at 152.56 (L: 152.51 / H: 152.82)
  • Italy / German 10-Yr spread 2.4bps wider at 106.3bps

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