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EGBs-GILTS CASH CLOSE: Flatter As Hike Pricing Firms

BONDS

Gilts underperformed Bunds as the UK government unveiled its budget plans Thursday, with both curves flattening.

  • The UK autumn budget statement had relatively few surprises, though next year's expected Gilt remit exceeded consensus.
  • ECB but particularly BoE hike pricing firmed (terminal rate up 10bp), fuelled by a US rate sell-off (Fed's Bullard contemplating rates as high as 7%).
  • Curves bear flattened, with long-end yields weighed down by recession concerns (Brent fell below $90) and risk-off in equities.
  • Periphery spreads narrowed from earlier wides; BTPs round-tripped from near 200bp to Bunds to close at 191.7bp, 2.3bp tighter on the session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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Gilts underperformed Bunds as the UK government unveiled its budget plans Thursday, with both curves flattening.

  • The UK autumn budget statement had relatively few surprises, though next year's expected Gilt remit exceeded consensus.
  • ECB but particularly BoE hike pricing firmed (terminal rate up 10bp), fuelled by a US rate sell-off (Fed's Bullard contemplating rates as high as 7%).
  • Curves bear flattened, with long-end yields weighed down by recession concerns (Brent fell below $90) and risk-off in equities.
  • Periphery spreads narrowed from earlier wides; BTPs round-tripped from near 200bp to Bunds to close at 191.7bp, 2.3bp tighter on the session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less