Free Trial

EGBs-GILTS CASH CLOSE: Bear Steepening On Strong US Inflation Data

BONDS

EGB and Gilt yields retraced some of the drop seen earlier in the week on Thursday after stronger-than-expected US September inflation data.

  • The European morning session saw some modest gains (Gilts benefited from softer-than-expected manufacturing data) that faded as oil prices and equities found a footing.
  • But trade was tentative ahead of US CPI data, which saw global core FI retreat sharply as the implications of unexpectedly strong core/supercore figures were digested. The selling momentum carried on through the cash close.
  • German and UK curves bear steepened on the day, with Gilts underperforming Bunds.
  • Periphery EGB spreads widened led by BTPs, having cheapened post-CPI and on ECB's Vasle calling for a debate to begin on shrinking the balance sheet.
  • The week concludes Friday with final Sept Eurozone CPI data and Eurozone industrial production for August, along with multiple central bank speakers once again including BoE's Bailey and ECB's Lagarde.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 5.3bps at 3.161%, 5-Yr is up 5.7bps at 2.716%, 10-Yr is up 6.8bps at 2.786%, and 30-Yr is up 7.6bps at 2.975%.
  • UK: The 2-Yr yield is up 5.3bps at 4.85%, 5-Yr is up 8.3bps at 4.471%, 10-Yr is up 9.5bps at 4.423%, and 30-Yr is up 9.6bps at 4.864%.
  • Italian BTP spread up 2.6bps at 197.7bps / Spanish up 1.4bps at 111.3bps

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.