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EGBs-GILTS CASH CLOSE: The Long End Comes Back

BONDS

Bunds and Gilts bull flattened Wednesday after early weakness, following the lead of Treasuries which strengthened on dovish-leaning Congressional testimony by Fed Chair Powell.

  • Gilts had sold off early on strong UK June inflation data out in the morning. Eurozone industrial production data disappointed, but that was considered stale (May).
  • Periphery spreads widened slightly, with 10Y BTPs failing to break the 100bps mark.
  • Supply came from Germany (Bund, EUR3.392bn allotted) and Portugal (OTs, EUR914mn).
  • Thursday sees UK labor market data, and Spanish and French bond supply, plus comments from BOE's Saunders.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is down 0.6bps at -0.678%, 5-Yr is down 1.9bps at -0.618%, 10-Yr is down 2.5bps at -0.319%, and 30-Yr is down 3.4bps at 0.177%.
  • UK: The 2-Yr yield is down 1.1bps at 0.082%, 5-Yr is up 0.2bps at 0.297%, 10-Yr is down 0.5bps at 0.627%, and 30-Yr is down 2.2bps at 1.103%.
  • Italian BTP spread up 2bps at 102.9bps / Spanish up 1.6bps at 63.2bps

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