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BONDS: EGBs-GILTS CASH CLOSE: US Data Exacerbates Long-End Selloff

BONDS
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Bunds outperformed Gilts Tuesday, with bear steepening evident across European curves.

  • Core FI was under some pressure in European morning trade, with the long end under duress amid supply (including 30Y Gilt auction) and higher oil prices/equities.
  • An in-line December flash Eurozone HICP report (on softer-than-expected Italian and French prints)  had only a modest dovish impact.
  • Stronger-than-expected US economic data (job openings, ISM Services prices) saw Bunds and Gilts head to session lows a couple of hours before the cash close.
  • Yields closed near the session highs, and the UK and German curves bear steepened on the day. 10Y UK yields hit the highest in 15 months, with 30Y the highest since 1998. 10Y Bund yields saw their highest close since July 2024/
  • Periphery EGB spreads widened despite the rise in equities, led by BTPs.
  • Data Wednesday includes German factory orders and retail sales, with consumer confidence surveys from France and the Eurozone. ECB's Villeroy is also due to speak.

Closing Yields / 10-Yr EGB Spreads To Germany

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Bunds outperformed Gilts Tuesday, with bear steepening evident across European curves.

  • Core FI was under some pressure in European morning trade, with the long end under duress amid supply (including 30Y Gilt auction) and higher oil prices/equities.
  • An in-line December flash Eurozone HICP report (on softer-than-expected Italian and French prints)  had only a modest dovish impact.
  • Stronger-than-expected US economic data (job openings, ISM Services prices) saw Bunds and Gilts head to session lows a couple of hours before the cash close.
  • Yields closed near the session highs, and the UK and German curves bear steepened on the day. 10Y UK yields hit the highest in 15 months, with 30Y the highest since 1998. 10Y Bund yields saw their highest close since July 2024/
  • Periphery EGB spreads widened despite the rise in equities, led by BTPs.
  • Data Wednesday includes German factory orders and retail sales, with consumer confidence surveys from France and the Eurozone. ECB's Villeroy is also due to speak.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less