June 30, 2022 16:12 GMT
Bund yields continued to plummet Thursday, continuing the price action following a below-expected German inflation print Wednesday.
- Schatz and Bobl yields erased the last three weeks' rise, with the German curve outperforming its UK counterpart.
- Bull steepening was the common theme as rate hikes were priced out (ECB end-2022 implied rates fell 14bp, BoE -8bp), with growth fears resurfacing (commodity prices dropped sharply, European equities down 1.5-2% to end a miserable half-year).
- BTP spreads fell to session lows on a Reuters sources report saying the ECB will buy periphery EGB bonds with proceeds from maturing core/semi-core instruments bought under PEPP. But the move eventually faded, due in part to the risk-off move overall, but also perhaps lingering doubts over whether this is a "done deal".
Closing Yields / 10-Yr Periphery EGB Spreads To Germany:
- Germany: The 2-Yr yield is down 18.9bps at 0.649%, 5-Yr is down 21.6bps at 1.067%, 10-Yr is down 18.3bps at 1.336%, and 30-Yr is down 12.3bps at 1.615%.
- UK: The 2-Yr yield is down 19.9bps at 1.842%, 5-Yr is down 18.2bps at 1.893%, 10-Yr is down 15.6bps at 2.229%, and 30-Yr is down 10.5bps at 2.564%.
- Italian BTP spread up 4.6bps at 192.8bps / Greek up 12.8bps at 228bps
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