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BONDS: EGBs-GILTS CASH CLOSE: Year Winds Down With Modest Gains

BONDS

European curves leaned modestly bull flatter Monday.

  • Bunds and Gilts gained fairly steadily throughout the session, regaining ground from Friday's sell-off.
  • There was no clear upside driver in the morning session, though gains ramped up in the afternoon as equities fell and the USD gained in an apparent risk-off move, while US MNI Chicago PMI came in below-expected.
  • Spanish flash December inflation came in above-expected (core 2.6% Y/Y vs 2.4% survey), but there was little market reaction with the main national readings not released until next week.
  • ECB's Stournaras eyed gradual rate cuts but that bigger reductions "shouldn't be ruled out" if inflation cooperates.
  • Periphery EGB spreads widened by a little under 1bp as equities fell. French OATs underperformed peers, with 10Y spreads widening 2bp.
  • As per usual on New Year's Eve, Tuesday's schedule is light, with Irish flash inflation the main scheduled highlight, and widespread market closures in Europe until Thursday.

Closing Yields / 10-Yr EGB Spreads To Germany

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European curves leaned modestly bull flatter Monday.

  • Bunds and Gilts gained fairly steadily throughout the session, regaining ground from Friday's sell-off.
  • There was no clear upside driver in the morning session, though gains ramped up in the afternoon as equities fell and the USD gained in an apparent risk-off move, while US MNI Chicago PMI came in below-expected.
  • Spanish flash December inflation came in above-expected (core 2.6% Y/Y vs 2.4% survey), but there was little market reaction with the main national readings not released until next week.
  • ECB's Stournaras eyed gradual rate cuts but that bigger reductions "shouldn't be ruled out" if inflation cooperates.
  • Periphery EGB spreads widened by a little under 1bp as equities fell. French OATs underperformed peers, with 10Y spreads widening 2bp.
  • As per usual on New Year's Eve, Tuesday's schedule is light, with Irish flash inflation the main scheduled highlight, and widespread market closures in Europe until Thursday.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less