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Exchange Operation Announced


10Y Put Sale


Some reversal in the Pound


PAOF of the 0.375% Oct-26 Gilt not taken up

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European FI staged more impressive gains Thursday as yields retreat from the recent highs, with the core space seeing short-end GIlts and 10Y Bunds outperforming.

  • The gains came against a backdrop of stronger equities and (somewhat counterintuitively given their role in the recent inflation narrative) commodity prices.
  • The risk-on atmosphere helped periphery EGB spreads tighten (though Greece widened).
  • Hard to pin the move on any particular factor, though it seems the hawkish BoE / inflation narrative weakening Gilts of late may have gone too far and the move is now unwinding. The violence of the UK move has arguably helped catalyse the Bund rally.
  • BoE's Mann noted she was willing to hold fire on rate hikes, helping 2Y Gilts continue their rally later in the session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is down 2.3bps at -0.692%, 5-Yr is down 5.8bps at -0.537%, 10-Yr is down 6.4bps at -0.191%, and 30-Yr is down 6.1bps at 0.238%.
  • UK: The 2-Yr yield is down 6.2bps at 0.514%, 5-Yr is down 6.4bps at 0.699%, 10-Yr is down 4.7bps at 1.042%, and 30-Yr is down 5.4bps at 1.289%.
  • Italian BTP spread down 0.7bps at 102.4bps / Greek up 3.5bps at 109.1bps