Free Trial

EGBs-GILTS CASH CLOSE: BTPs Outperform As Core FI Reverses Higher


An early sell-off Monday fully had reversed by the cash close, with Bunds and Gilts benefiting from a bid in US Treasuries.

  • Bunds underperformed Gilts, though an early German bear steepening flipped to flattening as the USD weakened and equities rose alongside a broader move lower in rates. Gilts leaned bull flatter overall (2s30s flatter, 2s10s a little steeper on the day).
  • It was difficult to pinpoint a specific reason for the reversals, which accelerated after high-profile market participants (incl Bill Ackman and Bill Gross) expressed the view that the recent US yield rise had gone far enough.
  • We note though that our Europe Pi positioning update today showed significant structural shorts across Eurex contracts, with the trade potentially getting overcrowded as yields pushed to fresh multi-year highs.
  • BTPs outperformed, with 10Y spreads down 7bp after S&P affirmed the sovereign at BBB; Outlook Stable; Greek spreads were close behind, after attaining investment grade status at S&P Friday.
  • Focus Tuesday is on flash October PMIs, with the ECB decision Thursday the clear focus for the week - MNI's preview went out today. The UK's ONS publishes new labour market data Tuesday morning (though won't publish the Jun-Aug LFS data).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 1.2bps at 3.134%, 5-Yr is down 0.3bps at 2.78%, 10-Yr is down 1.5bps at 2.874%, and 30-Yr is down 2.6bps at 3.068%.
  • UK: The 2-Yr yield is down 5.7bps at 4.832%, 5-Yr is down 5.7bps at 4.579%, 10-Yr is down 5.2bps at 4.599%, and 30-Yr is down 6.2bps at 5.049%.
  • Italian BTP spread down 7bps at 196.6bps / Greek down 6.6bps at 141.8bps

To read the full story



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.