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EGBs-GILTS CASH CLOSE: UK Bear Flattening On Political Uncertainty


UK yields underperformed with significant bear flattening to end the week, while Germany's curve twist flattened. In a session of limited data aside from weaker-than-expected UK retail sales, there was still a wide range of flashpoints.

  • These included UK political uncertainty pushing short end Gilt yields higher, and later, a recovery in European FI following dovish repricing of Federal Reserve tightening expectations on the back of a Wall Street Journal article.
  • Also of interest was a newspaper article overnight that the ECB was considering introducing a 4th policy rate for reverse repo operations, which helped swap spreads compress as repo stresses were seen easing, but the central bank later pushed back on the report.
  • After hours, attention turns to the ratings agencies (in focus are S&P and Moody's reviews of their ratings for the UK), with the Conservative leadership race heating up as well.


  • Germany: The 2-Yr yield is down 8bps at 2.041%, 5-Yr is down 3.3bps at 2.212%, 10-Yr is up 1.3bps at 2.417%, and 30-Yr is up 7.5bps at 2.442%.
  • UK: The 2-Yr yield is up 21.1bps at 3.799%, 5-Yr is up 18.6bps at 4.153%, 10-Yr is up 14.1bps at 4.054%, and 30-Yr is up 10bps at 4.06%.
  • Italian BTP spread down 2bps at 233bps / Spanish down 1.3bps at 111.6bps

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