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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessEGBs-GILTS CASH CLOSE: Short End Crashes On UK Double-Digit CPI
A higher-than-expected 10.1% UK July CPI reading (a 40-Yr high, vs 9.8% expected) set an extremely bearish tone for Wednesday trade, with short-end instruments badly underperforming as central bank hike expectations ratcheted up.
- European curves bear flattened, with the UK leading the way, as 200+bp of BoE hikes are now priced in this cycle (including a decent chance of 75bp in Sept), vs 170bp yesterday.
- The UK curve inverted further, 2s10s to lowest since 2008, 2s5s since 2007 as 2Y yields hit a post-2008 high.
- The German short end also sold off, with ECB hike pricing higher but not as much as BoE.
- The highest-beta EGB periphery sovereigns - Italy and Greece - underperformed, with 10Y spreads widening around 7bp.
Closing Yields / 10-Yr Periphery EGB Spreads To Germany:
- Germany: The 2-Yr yield is up 15.4bps at 0.731%, 5-Yr is up 15.4bps at 0.898%, 10-Yr is up 11.2bps at 1.083%, and 30-Yr is up 6.2bps at 1.292%.
- UK: The 2-Yr yield is up 24.8bps at 2.403%, 5-Yr is up 18.3bps at 2.148%, 10-Yr is up 16.3bps at 2.288%, and 30-Yr is up 10.8bps at 2.623%.
- Italian BTP spread up 7bps at 223.3bps / Greek up 6.7bps at 243.2bps
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.