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EGBs-GILTS: Risk-Off Rally For Core FI

BOND SUMMARY

Bunds and Gilts have shot higher in the European open with bull flattening. Equity indices off by 1.5-2% and peripheral spreads widening.

  • COVID 2nd wave concerns and fading hopes of US fiscal stimulus the primary driver overnight. Most focus in Europe is on the EU summit Thu-Fri, with the inevitable Brexit headlines.
  • In supply, French and Spanish bond auctions; books open on new Austria 20 Yr.
  • BoE's Cunliffe (1400BST) and ECB's Lagarde (1700BST) are the day's main central bank speakers; very little in the way of European data.

Latest levels:

  • Dec Bund futures (RX) up 54 ticks at 175.89 (L: 175.35 / H: 175.94)
  • Dec Gilt futures (G) up 32 ticks at 136.39 (L: 136.27 / H: 136.41)
  • Dec BTP futures (IK) down 22 ticks at 150 (L: 149.76 / H: 150.24)
  • Italy / German 10-Yr spread 4.1bps wider at 127.9bps

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