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BONDS: EGBs-GILTS CASH CLOSE: Yields Pull Back On Tech-Led Equity Weakness

BONDS
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European yields fell Monday though finished off session lows, mirroring intraday movements in equities.

  • U.S. equity weakness (less pronounced in Europe), triggered by Chinese tech firm DeepSeek's AI advancements weighing on U.S. tech megacaps, saw bonds supported for most of the session.
  • However, yields finished up from intraday lows as stocks recovered. 10Y Gilts closed 3bp up from the session lows, with Bunds bouncing 4bp.
  • Even so, German curve bull steepened, with the UK's more mixed with belly outperformance. Periphery/semi-core EGB spreads to Bunds widened slightly; RAGBs slightly underperformed peers following an Austrian dual-tranche syndication mandate.
  • In data, January German IFO came in a little stronger than expected, but Expectations unexpectedly fell. Market reaction was limited.
  • Focus for the week remains on Thursday's ECB decision, as well as multiple data points including Eurozone country-level preliminary inflation data for January.

Closing Yields / 10-Yr EGB Spreads To Germany

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European yields fell Monday though finished off session lows, mirroring intraday movements in equities.

  • U.S. equity weakness (less pronounced in Europe), triggered by Chinese tech firm DeepSeek's AI advancements weighing on U.S. tech megacaps, saw bonds supported for most of the session.
  • However, yields finished up from intraday lows as stocks recovered. 10Y Gilts closed 3bp up from the session lows, with Bunds bouncing 4bp.
  • Even so, German curve bull steepened, with the UK's more mixed with belly outperformance. Periphery/semi-core EGB spreads to Bunds widened slightly; RAGBs slightly underperformed peers following an Austrian dual-tranche syndication mandate.
  • In data, January German IFO came in a little stronger than expected, but Expectations unexpectedly fell. Market reaction was limited.
  • Focus for the week remains on Thursday's ECB decision, as well as multiple data points including Eurozone country-level preliminary inflation data for January.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less