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EGBs-GILTS CASH CLOSE: OAT Spreads Tighten After Macron Win

BONDS

Bunds modestly underperformed Gilts Monday, with both underperforming US Treasuries following Sunday's better-than-expected result for France Pres Macron in the 1st round of presidential elections.

  • With Macron a firmer favourite to win re-election, 10Y OAT spreads tightened ~4bp (as did BTPs).
  • As the France election safe haven bid evaporated (and exacerbated by US curve steepening), 10Y yields hit new multi-year highs: UK since Jan 2016, Germany since Sept 2015.
  • Attention turns to Tuesday's US CPI report and Thursday's ECB meeting.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 8.4bps at 0.134%, 5-Yr is up 9.8bps at 0.626%, 10-Yr is up 10.9bps at 0.816%, and 30-Yr is up 11.9bps at 0.928%.
  • UK: The 2-Yr yield is up 8bps at 1.56%, 5-Yr is up 8.4bps at 1.614%, 10-Yr is up 9.8bps at 1.848%, and 30-Yr is up 8.6bps at 1.985%.
  • Italian BTP spread down 3.9bps at 165.1bps / Spanish down 5.9bps at 93.7bps

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