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EGBs-GILTS CASH CLOSE: Decent Supply, But Little Direction


European FI failed to find decisive direction Tuesday. Yields rose sharply at the London open, then fell to session lows mid-morning before drifting higher again - finishing largely unchanged.

  • Periphery spreads clawed back some ground vs Monday's widening.
  • In supply, the GBP3bln 5Y auction was weak (earlier, DMO consultation minutes for 3Q issuance were largely in line with MNI's expectations) Finland sold E3bln 5Y RFGB via syndication, and Germany auctioned 4bln 7Y Bund.
  • We also saw a lot of downside buying in Bunds via options.
  • In data: German 2Q GDP was revised a little higher, but no market impact.
  • Wednesday's calendar includes German IFO data and an appearance by ECB's de Guindos.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: 2-Yr yield is up 0.3bps at -0.744%, 5-Yr is up 0.5bps at -0.737%, 10-Yr is up 0.3bps at -0.478%, and 30-Yr is up 0.3bps at -0.028%.
  • UK: 2-Yr yield is up 1bps at 0.125%, 5-Yr is up 1bps at 0.27%, 10-Yr is up 0.3bps at 0.538%, and 30-Yr is up 0.2bps at 0.947%.
  • Italian BTP spread down 1.4bps at 104.8bps / Spanish up 0.1bps at 71.3bps

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