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Needle Still Points South


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Heading North


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The UK and German curves bear steepened Tuesday, with BTPs underperforming the European FI space as risk appetite was clawed back again.

  • Skyrocketing European energy costs and US dollar strength were underlying themes.
  • Gilts disconnected from sharp weakness in GBP, with the bond market more focused on the hawkish BoE. 10Y Bunds printed a -0.174% high, but Gilt/Bund spread eyeing 2019 high (just above 121bp). All that said, cash yields finished off the session highs.
  • A few ECB speakers today, including Kazimir who set off a brief EURUSD spike (but not much fixed income response) saying the ECB wouldn't automatically boost APP when PEPP ends.
  • UK sold GBP2bln 30Y Gilt, Netherlands E4.9bln Jan-29 DSL.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 0.6bps at -0.683%, 5-Yr is up 1.1bps at -0.549%, 10-Yr is up 2.4bps at -0.199%, and 30-Yr is up 1.4bps at 0.264%.
  • UK: The 2-Yr yield is up 2.3bps at 0.409%, 5-Yr is up 3.2bps at 0.628%, 10-Yr is up 4.2bps at 0.994%, and 30-Yr is up 5bps at 1.325%.
  • Italian BTP spread up 3.7bps at 105.4bps / Spanish up 0.7bps at 64.1bps