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EGBs-GILTS CASH CLOSE: Rally Fades With Supply Eyed


The Bund and Gilt curves bull flattened Monday, but yields ended well above the session's lowest levels as equities rebounded. Large supply and US CPI Tuesday also presenting some near-term risk.

  • Tuesday will see big issuance: E30bln in euro-denominated supply (including EU syndication), and GBP6bln in 2039 Gilt syndication. Not to mention large US supply today/Tuesday.
  • Periphery spreads tightened; Italy 10-Yr spreads have retraced most of last week's widening.
  • As expected, the UK authorities announced they were going ahead with plans to end COVID-19 restrictions in England on 19 July.
  • Otherwise, no bond supply today and nothing new from ECB speakers.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 0.4bps at -0.672%, 5-Yr is down 0.2bps at -0.598%, 10-Yr is down 0.2bps at -0.295%, and 30-Yr is down 0.1bps at 0.205%.
  • UK: The 2-Yr yield is up 0.7bps at 0.094%, 5-Yr is up 0.1bps at 0.296%, 10-Yr is down 0.4bps at 0.651%, and 30-Yr is down 1.5bps at 1.158%.
  • Italian BTP spread down 2.3bps at 103.3bps / Spanish down 1.1bps at 63.6bps

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