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EGBs-GILTS: Gilts, BTPs Underperforming Early

BOND SUMMARY

Early bear steepening in the UK and German curves Tuesday, with Gilts underperforming. Stocks and GBP+EUR higher, but BTPs continue to underperform the periphery with spreads widening.

  • Germany's top court rejected attempts to enforce its 2020 ruling on PSPP with yet more orders against the gov't and Bundesbank. RTE reports UK considering using force majeure on Northern Ireland Protocol.
  • UK posted better-than-expected labour market numbers; Eurozone prelim 1Q GDP up at 1000ET.
  • In supply, UK sells GBP3.25bln of 3-Yr Gilt and GBP2.25bln of 20-Yr Gilt (and DMO consultation notes out, see FI Bullets). Germany sells E6bln Schatz; EU syndication of dual-tranche SURE.
  • Speakers include ECB's Villeroy (0900BST) and Lagarde (1500BST), with BOE's Bailey, Broadbent and Ramsden appearing (1500BST).

Latest levels:

  • Jun Bund futures (RX) down 12 ticks at 168.74 (L: 168.71 / H: 168.94)
  • Jun Gilt futures (G) down 20 ticks at 127.22 (L: 127.21 / H: 127.44)
  • Jun BTP futures (IK) down 19 ticks at 144.8 (L: 144.76 / H: 145.11)
  • Italy / German 10-Yr spread 1.6bps wider at 123.6bps

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