European bonds rallied for most of Monday's session following some weakness at the open, amid light trading volume with holidays in several countries (including France, Germany, Italy, and Spain).
- The fall in yields came amid a sharp drop in oil prices (Brent -4%) and unexpectedly weak economic data overnight in China and in the afternoon from the US.
- Apart from the steady drop in yields throughout the session, there were few key themes: German yields outperformed the UK in the short-end/belly, but the converse was true further down the curve.
- No bond issuance (back Tuesday w Gilt and Bobl auctions), key data (UK employment and German ZEW feature Tuesday), or central bank speakers.
- Greek debt underperformed, with the 10Y spread to Bunds nearly 4bp wider (other periphery EGB spreads were relatively unchanged).
Closing Yields / 10-Yr Periphery EGB Spreads To Germany:
- Germany: The 2-Yr yield is down 7.8bps at 0.53%, 5-Yr is down 7.7bps at 0.678%, 10-Yr is down 8.7bps at 0.9%, and 30-Yr is down 8.2bps at 1.155%.
- UK: The 2-Yr yield is down 2.1bps at 2.032%, 5-Yr is down 7.6bps at 1.855%, 10-Yr is down 9.4bps at 2.017%, and 30-Yr is down 10.1bps at 2.435%.
- Italian BTP spread down 0.8bps at 207.5bps / Greek up 3.7bps at 228.9bps