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EGBs-GILTS CASH CLOSE: Afternoon Recovery

BONDS

Bunds and Gilts overcame early weakness to finish flat/stronger respectively. Periphery spreads mostly tightened, but Greece underperformed amid heavy supply.

  • ECB speakers featured heavily again: this time we heard a bit more from the doves, with Stournaras suggesting that the current inflation surge is temporary and policy should remain cautious.
  • A miss in US ADP employment helped boost global FI in the afternoon.
  • Heavy supply: Greece sold E2.5bln via syndicated dual-tranche tap of 5/30Y GGBs; Germany E5.5bln syndication of 30Y Bund; UK 2.5bln of Gilt. France and Spain auctions Thursday.
  • Italy and Spain Aug PMIs surprised to the upside. Also, BOE announced ex-Goldman/ECB Huw Pill would become the new chief economist.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 0.2bps at -0.711%, 5-Yr is down 0.4bps at -0.682%, 10-Yr is up 0.9bps at -0.374%, and 30-Yr is up 2.4bps at 0.116%.
  • UK: The 2-Yr yield is down 1.9bps at 0.2%, 5-Yr is down 1.8bps at 0.365%, 10-Yr is down 2.2bps at 0.692%, and 30-Yr is down 2.3bps at 1.033%.
  • Italian BTP spread down 2.8bps at 106.4bps / Greek up 0.7bps at 115.7bps

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