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EGBs-GILTS CASH CLOSE: BTP Spreads Widen On Politics

BONDS

Big supply, political risk and pushback on UK negative rates saw weakness across the FI space Tuesday. Main theme was supply: UK, Netherlands, Austria, Belgium (syndication) all issued today.

  • BoE's Bailey noted "lots of issues" w negative rates in the UK, which weakened the short-end.
  • BTP spreads widened the most since in more than 2 months amid rumblings of a collapse in the ruling Italian coalition.
  • Supply theme continues Wednesday w Spain set to syndicate new 10-Yr and Germany, Portugal and the UK all hold auctions. Also Weds, ECB's Villeroy and Lagarde speak, and we get IT and EZ industrial production data.
Closing Levels / 10-Yr Periphery EGB Spreads:
  • Germany: The 2-Yr yield is up 0.8bps at -0.691%, 5-Yr is up 2.8bps at -0.688%, 10-Yr is up 2.8bps at -0.468%, and 30-Yr is up 2.5bps at -0.065%.
  • UK: The 2-Yr yield is up 4bps at -0.077%, 5-Yr is up 4.4bps at 0.012%, 10-Yr is up 4.3bps at 0.352%, and 30-Yr is up 2.5bps at 0.928%.
  • Italian BTP spread up 5.8bps at 111.8bps / Spanish up 2.4bps at 57.8bps

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