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BONDS: EGBs-GILTS CASH CLOSE: Modest Steepening, Tracking Treasuries

BONDS
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European yields moved in a fairly wide range but closed little changed Friday.

  • Gilts and Bunds weakened in morning trade,  with equities bid, and the space generally following the lead of US Treasuries for a second consecutive session.
  • Core European FI rallied as the highly anticipated US employment report was taken favourably by rates markets, with aggregate payroll gains in line with expectations, but the unemployment rate moving a little higher than foreseen. But the move faded toward the cash close, again mirroring a modest pullback in Treasuries.
  • The German curve marginally twist steepened on the day, with the UK's modestly bull steepening.
  • After opening tighter to Bunds, OAT spreads retraced move of the initial move, widening throughout the session on continued political uncertainty after this week's government collapse. Periphery EGB spreads followed a similar path, finishing little changed on the day.
  • Next week's highlight is the ECB meeting (a 25bp cut remains fully priced, little changed Friday) - we also get UK monthly activity data and an appearance by BoE's Ramsden.

Closing Yields / 10-Yr EGB Spreads To Germany

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European yields moved in a fairly wide range but closed little changed Friday.

  • Gilts and Bunds weakened in morning trade,  with equities bid, and the space generally following the lead of US Treasuries for a second consecutive session.
  • Core European FI rallied as the highly anticipated US employment report was taken favourably by rates markets, with aggregate payroll gains in line with expectations, but the unemployment rate moving a little higher than foreseen. But the move faded toward the cash close, again mirroring a modest pullback in Treasuries.
  • The German curve marginally twist steepened on the day, with the UK's modestly bull steepening.
  • After opening tighter to Bunds, OAT spreads retraced move of the initial move, widening throughout the session on continued political uncertainty after this week's government collapse. Periphery EGB spreads followed a similar path, finishing little changed on the day.
  • Next week's highlight is the ECB meeting (a 25bp cut remains fully priced, little changed Friday) - we also get UK monthly activity data and an appearance by BoE's Ramsden.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less