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Stronger In a Range


Weaker In A Range


Ending The Week On A Soft Note


Bearish Risk Growing


Stronger, But Still Vulnerable


SP500 PE Ratio vs. CPI Inflation

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In a soft start to the week for the European FI space, the standout move was in periphery spreads which have widened sharply in recent days.

  • Spain, Portugal, Greece 10 Yr spreads traded at the widest vs Bunds since mid-2020, with the best explanation appearing to be speculation over potential ECB slowdown of PEPP purchases as soon as June. Italy widened most; notably the sovereign has a heavy issuance slate for the remainder of the year and would be unduly impacted by a slowdown in purchases.
  • Gilts and Bunds were stronger early but sold off through most of the morning.
  • Tuesday sees UK labor market data and flash Eurozone Q1 GDP. Appearances by ECB's Villeroy, and BOE's Bailey, Broadbent and Ramsden. UK sells GBP5.5bln in Gilts, Germany E6bln Schatz; EU syndicates dual-tranche SURE (MNI est size E11-15bln).

Closing yields/10-Yr Spreads to Bunds:

  • Germany: The 2-Yr yield is up 0.1bps at -0.655%, 5-Yr is up 1bps at -0.51%, 10-Yr is up 1.4bps at -0.115%, and 30-Yr is up 1.2bps at 0.446%.
  • UK: The 2-Yr yield is up 0.4bps at 0.084%, 5-Yr is up 0.6bps at 0.386%, 10-Yr is up 0.8bps at 0.865%, and 30-Yr is up 0.4bps at 1.401%.
  • Italian BTP spread up 2bps at 122bps / Spanish spread up 1.6bps at 73bps