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EGBs-GILTS CASH CLOSE: UK Bull Flattening Stands Out

BONDS

The standout move of the day has been in the Gilt curve, with significant bull flattening as fears mount over a 'no deal' Brexit. Bunds largely followed suit.
This overshadowed the day's other big story, which was supply: Italy sold E10bln of new 20-Yr BTP via syndication on orderbooks of over E84bln; UK saw GBP76bln in orders for Jul-35 Gilt. This was in addition to Dutch and Austrian auctions.

Periphery spreads wider across the board, though BTP spreads came in from widest levels on the day.

Most focus for the rest of the week lies on the ECB decision Thursday. Closing levels:

Germany: The 2-Yr yield is down 0.4bps at -0.705%, 5-Yr is down 1.1bps at -0.7%, 10-Yr is down 3.2bps at -0.495%, and 30-Yr is down 3.6bps at -0.043%.

UK: The 2-Yr yield is down 4.1bps at -0.132%, 5-Yr is down 4.9bps at -0.105%, 10-Yr is down 6bps at 0.188%, and 30-Yr is down 7.8bps at 0.745%.

10-Yr Periphery EGB Spreads:

  • Italian BTP spread up 1.4bps at 152.3bps
  • Spanish bond spread up 0.6bps at 82.1bps
  • Portuguese PGB spread up 1.3bps at 85.5bps
  • Greek bond spread up 4.9bps at 167bps

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