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EGBs Under Early Pressure Amid Supply, Firm Equities

BOND SUMMARY
  • Core EGBs traded under pressure from the open, with bond supply from Germany and the UK weighing on prices as well as the late rally in US equities Monday, which put the e-mini S&P above 4,300 for the first time since late April.
  • The UK DMO sold GBP 2.75bln in 2029 Gilts this morning, with the auction producing a modest tail of 0.5bps. Decent demand was noted, bumping the bid/cover up to 2.65x from 2.48x at the previous sale. Germany aim to allot EUR 4bln in 5y bonds imminently.
  • Core/Peripheral yield spreads trade wider, with the Italian/German 10y spread wider by close to 5bps on further signs of a deteriorating economy on the continent: The German ZEW survey fell below forecast, with the expectations component dropping to its lowest level since the Global Financial Crisis.

Latest levels:

  • Germany: The 2-Yr yield is up 2.3bps at 0.553%, 5-Yr is up 2.9bps at 0.707%, 10-Yr is up 2.7bps at 0.927%, and 30-Yr is up 2.8bps at 1.183%.
  • UK: The 2-Yr yield is up 5.5bps at 2.087%, 5-Yr is up 3.9bps at 1.894%, 10-Yr is up 4bps at 2.057%, and 30-Yr is up 4.9bps at 2.484%.
  • Italy / German 10-Yr spread 4.5bps wider at 212bps
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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