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EGBs-GILTS CASH CLOSE: German Bull Steepening On Weak PMIs

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Weaker-than-expected July PMI data that carried recessionary implications for the eurozone saw front-end EGB yields collapse to end the week, less than 24 hours after the ECB hiked 50bp.

  • The bullish steepening move was extended in the afternoon on a big US Services PMI miss, but yields came off lows toward the cash close.
  • Schatz yields fell over 22bp (German PMI was especially weak) as another 50bp ECB move in September was put under scrutiny.
  • Conversely, UK PMIs beat consensus in contrast to the eurozone misses; Gilts underperformed.
  • Periphery spreads tightened slightly amid a broader risk-on move triggered by less-hawkish central bank hike pricing.

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

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Weaker-than-expected July PMI data that carried recessionary implications for the eurozone saw front-end EGB yields collapse to end the week, less than 24 hours after the ECB hiked 50bp.

  • The bullish steepening move was extended in the afternoon on a big US Services PMI miss, but yields came off lows toward the cash close.
  • Schatz yields fell over 22bp (German PMI was especially weak) as another 50bp ECB move in September was put under scrutiny.
  • Conversely, UK PMIs beat consensus in contrast to the eurozone misses; Gilts underperformed.
  • Periphery spreads tightened slightly amid a broader risk-on move triggered by less-hawkish central bank hike pricing.

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

Keep reading...Show less