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EGBs-GILTS CASH CLOSE: BTPs Blow Out While UK Short End Underperforms

BONDS

BTPs underperformed the European space as a whole Tuesday, while Gilts weakened vs Bunds.

  • Widening BTP spreads (10Y yields rose the most since Jun 14, up 20+bp at session highs) couldn't be pinned to any particular catalyst but political risk ahead of September elections and thin trading volumes contributed.
  • The Gilt curve bear flattened with 2Y yields briefly hitting 2-month highs; some desks cited strong wage pressures in this morning's employment report potentially encouraging more BoE hikes.
  • Supply consisted of Bobl and Gilt, little reaction. The only remaining auction this week is France (Thurs).
  • UK July CPI takes centre stage Wednesday, with Eurozone GDP up later in the morning.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

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BTPs underperformed the European space as a whole Tuesday, while Gilts weakened vs Bunds.

  • Widening BTP spreads (10Y yields rose the most since Jun 14, up 20+bp at session highs) couldn't be pinned to any particular catalyst but political risk ahead of September elections and thin trading volumes contributed.
  • The Gilt curve bear flattened with 2Y yields briefly hitting 2-month highs; some desks cited strong wage pressures in this morning's employment report potentially encouraging more BoE hikes.
  • Supply consisted of Bobl and Gilt, little reaction. The only remaining auction this week is France (Thurs).
  • UK July CPI takes centre stage Wednesday, with Eurozone GDP up later in the morning.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

Keep reading...Show less