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EGBs-GILTS: Pushing Higher

BOND SUMMARY

Gilts and Bunds have hit highest levels in a week, with bull flattening in the curves despite long-end UK and German supply this morning. Front RX has broken through resistance at 176.59/60, next key resistances at 177.67 (current level) then 178.01.

UK sells combined GBP4.75B of Oct-29 and Oct-50 Gilt, with Germany selling E1.5B of Aug-50.

Italian spreads widening a little, 10-Yr again testing the 140bps spread level.

In Data, UK Jul CPI was the major release of the morning and came in much higher than expected on all measures, but little reaction as BoE seen looking through inflation data for the time being. Eurozone final infl figures at 1000BST won't be a market mover.** Latest levels:

  • Sep Bund futures (RX) up 25 ticks at 176.68 (L: 176.42 / H: 176.79)
  • Sep Gilt futures (G) up 23 ticks at 137.28 (L: 137.08 / H: 137.31)
  • Sep BTP futures (IK) up 6 ticks at 147.9 (L: 147.85 / H: 148.02)
  • Sep OAT futures (OA) up 24 ticks at 168.66 (L: 168.51 / H: 168.74)
  • Italy / German 10-Yr spread 1.6bps wider at 140.5bps

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