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EGBs-GILTS: Short End Slightly Underperforming

BONDS

Limited moves along the cash curves to start Tuesday, with the short-end slightly underperforming in Germany (Schatz yields higher) and the UK curves. Periphery spreads are marginally tighter.

  • A bit of early flattening has been reversed (German 5s30s within a whisker of a fresh 6-month low).
  • Little thematically in terms of risk appetite: equities are trading largely higher (FTSE futures a notable exception; Stoxx600 hitting an all-time high), with the EUR and GBP losing a bit of ground vs the USD.
  • A quiet schedule lies ahead. No ECB / BOE speakers; German ZEW the data highlight at 1000BST.
  • In bond supply, the UK sells GBP2.75bln of Jul-31 Gilt (MNI expects another successful auction of the benchmark 10-Yr: see our 0724BST auction preview).

Latest levels:

  • Sep Bund futures (RX) up 14 ticks at 176.66 (L: 176.55 / H: 176.77)
  • Sep Gilt futures (G) up 5 ticks at 129.62 (L: 129.59 / H: 129.73)
  • Sep BTP futures (IK) up 15 ticks at 155.23 (L: 155.11 / H: 155.28)
  • Italy / German 10-Yr spread 0.3bps tighter at 100.9bps

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