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BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform, Sell-Off Fades

BONDS
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Gilts underperformed Bunds and broader EGBs Monday, with pronounced bear flattening in the UK curve.

  • Bonds remained under pressure overnight to start the week's trade, with Gilt and Bund yields nearing lastweek's multi-month and in some cases multi-year highs as the hawkish implications of Friday's solid US employment report continued to reverberate.
  • The sell-off partially unwound over the course of the session, as dollar gains and equity losses consolidated with an eye on US and UK CPI Wednesday.
  • The UK curve bear flattened, with Germany's bear steepening.
  • Periphery EGB spreads to Bunds widened, with GGBs weakest as Greece announced a 10Y mandate likely to take place Tuesday (expectations had been it would occur next week).
  • Tuesday's data calendar is largely second tier (Italian industrial production), though we get multiple central bank speakers including ECB's Lane and Holzmann, and BOE's Breeden.
  • Also of note given fiscal considerations, new French PM Bayrou gives a key policy speech Tuesday afternoon.

Closing Yields / 10-Yr EGB Spreads To Germany

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Gilts underperformed Bunds and broader EGBs Monday, with pronounced bear flattening in the UK curve.

  • Bonds remained under pressure overnight to start the week's trade, with Gilt and Bund yields nearing lastweek's multi-month and in some cases multi-year highs as the hawkish implications of Friday's solid US employment report continued to reverberate.
  • The sell-off partially unwound over the course of the session, as dollar gains and equity losses consolidated with an eye on US and UK CPI Wednesday.
  • The UK curve bear flattened, with Germany's bear steepening.
  • Periphery EGB spreads to Bunds widened, with GGBs weakest as Greece announced a 10Y mandate likely to take place Tuesday (expectations had been it would occur next week).
  • Tuesday's data calendar is largely second tier (Italian industrial production), though we get multiple central bank speakers including ECB's Lane and Holzmann, and BOE's Breeden.
  • Also of note given fiscal considerations, new French PM Bayrou gives a key policy speech Tuesday afternoon.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less