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EGBs-GILTS: Retracing Early Gains

BOND SUMMARY

Bunds and Gilts are on the back foot after a strong early start to the week. Mixed moves across asset classes, with equities weaker and the USD stronger (but losing a bit of ground as EGBs/Gilts retrace).

  • Risk-off seen prompted largely by tighter UK COVID lockdown speculation.
  • ECB's Vasle (1000GMT) and Lagarde (1440GMT) make appearances, as does BOE's Tenreyro (1400GMT) on negative rates.
  • Not much 1st tier data (Spain Nov industrial output came in on the weak side). In supply, EFSF dual tranche books open.

Latest levels:

  • Mar Bund futures (RX) down 3 ticks at 177.27 (L: 177.24 / H: 177.55)
  • Mar Gilt futures (G) up 2 ticks at 134.39 (L: 134.38 / H: 134.64)
  • Mar BTP futures (IK) down 22 ticks at 152.12 (L: 152.1 / H: 152.45)
  • Mar OAT futures (OA) down 9 ticks at 167.49 (L: 167.46 / H: 167.78)
  • Italy / German 10-Yr spread 1.4bps wider at 106.4bps

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