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EGBs-GILTS: US-China Phone Call News Sinks Core FI


Official confirmation of an upcoming phone call on trade between China and the US (as had been reported unofficially overnight) has sent ripples across asset classes since the Gilt open, boosting equities, weakening the US dollar, and sending core FI sharply lower.

Earlier Bund curve flattening has dissipated somewhat, and BTP spreads have come off earlier wides.

Last EGB issuance of the week today is up to E7B in French OATs, and E1B in OAT linkers. UK sells GBP1.1B of Aug-28 linkers.

Very little on the European calendar otherwise. The ECB accounts of the July meeting published at 1230BST. Scandis will take some attention: Norges Bank decision at 0900BST expceted to be largely a non-event, Riksbank's Skingsley speaks at 1530BST (earlier, Sweden Jul unemp came in lower than expected). ** Latest levels:

  • Sep Bund futures (RX) down 4 ticks at 176.53 (L: 176.45 / H: 176.83)
  • Sep Gilt futures (G) down 9 ticks at 136.82 (L: 136.82 / H: 137.02)
  • Sep BTP futures (IK) down 15 ticks at 147.91 (L: 147.89 / H: 148.12)
  • Italy / German 10-Yr spread 1.3bps wider at 139.8bps

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