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EGBs-GILTS: Bear Steepening...And Flattening


The price action early Tuesday has been to fade Monday afternoon's impressive core FI rally / bull flattening. Bear steepening in the Bund curve contrasts modestly with bear flattening in the Gilt curve.

  • Periphery spreads are tightening, with Greece outperforming (10Y GGB in 2+bps vs Bunds).
  • As with yesterday's start, the early tone has been largely risk-on: we're eyeing all-time highs in some European equity indices (Eurostoxx600 and FTSE 250).
  • Not much in the way of key scheduled events outside of supply: Austria kicks off bond issuance for the week this morning with E1.495bln of 4/10-year RAGBs; UK sells GBP2.0bln of 30-year 1.25% Jul-51 Gilt.

Latest levels:

  • Sep Bund futures (RX) down 7 ticks at 176.75 (L: 176.69 / H: 176.93)
  • Sep Gilt futures (G) up 5 ticks at 130.09 (L: 130.01 / H: 130.22)
  • Sep BTP futures (IK) down 5 ticks at 154.79 (L: 154.74 / H: 154.94)
  • Italy / German 10-Yr spread 0.8bps tighter at 105bps

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