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EGBs-GILTS CASH CLOSE: OAT Spreads Continue To Tighten

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Bund and Gilt yields fell modestly Tuesday, with semi-core/periphery EGB spreads tightening

  • A flat-to-weaker morning for core FI in European trade - with June Eurozone flash inflation data coming in line with expectations - was followed by a decent rally in the afternoon with little discernable trigger.
  • The bounce faded quickly after data showed surprisingly high US job openings.
  • A panel appearance by ECB's Lagarde at the Sintra forum brought little new and had little impact on rate markets.
  • The German curve twist steepened on the day, with the UK's bull flattening.
  • EGB Periphery spreads tightened in a continuation of Monday's post-French election relief.
  • Notably, French spreads continued compressing, with 10Y OAT in 2.7bp vs Bunds to a fresh post-June 13 low. Some desks cited reports of hundreds of candidates withdrawing from their runoff races ahead of the 2nd election round, in an effort to block far right gains.
  • Wednesday sees final Services PMIs and Eurozone PPI, with multiple ECB speakers at Sintra.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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Bund and Gilt yields fell modestly Tuesday, with semi-core/periphery EGB spreads tightening

  • A flat-to-weaker morning for core FI in European trade - with June Eurozone flash inflation data coming in line with expectations - was followed by a decent rally in the afternoon with little discernable trigger.
  • The bounce faded quickly after data showed surprisingly high US job openings.
  • A panel appearance by ECB's Lagarde at the Sintra forum brought little new and had little impact on rate markets.
  • The German curve twist steepened on the day, with the UK's bull flattening.
  • EGB Periphery spreads tightened in a continuation of Monday's post-French election relief.
  • Notably, French spreads continued compressing, with 10Y OAT in 2.7bp vs Bunds to a fresh post-June 13 low. Some desks cited reports of hundreds of candidates withdrawing from their runoff races ahead of the 2nd election round, in an effort to block far right gains.
  • Wednesday sees final Services PMIs and Eurozone PPI, with multiple ECB speakers at Sintra.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less