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EGBs-GILTS: On The Front Foot Early

BOND SUMMARY

Bunds and Gilts have enjoyed a decent start within narrow ranges Wednesday, with periphery spreads a touch wider. After some disappointing Tier 2 data out earlier, main focus now is on supply (Gilt and Bobl), futures roll, and ECB speakers.

  • In a fairly quiet session for data, German retail sales came in weaker than expected, as did Spain unemployment data.
  • Eurex roll continues; Bund and Schatz leading the pace (>33% done).
  • In supply, UK sells GBP4.75bln of Gilts; Germany sells E4bln of Bobl. EFSF sent an RFP for banks for a transaction next week.
  • Speakers include ECB's Villeroy (1145BST), Weidmann (1645BST), Lagarde (1810BST), with the ECB publishing a report on the international role of the euro (1200BST).

Latest levels:

  • Jun Bund futures (RX) up 23 ticks at 170.06 (L: 169.88 / H: 170.14)
  • Sep Gilt futures (G) up 16 ticks at 127.03 (L: 126.89 / H: 127.09)
  • Jun BTP futures (IK) up 15 ticks at 147.65 (L: 147.6 / H: 147.84)
  • Italy / German 10-Yr spread 0.6bps wider at 108.5bps

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