European rates trading only properly....>

EGB SUMMARY: European rates trading only properly woke up after the Bank of

England said that "monetary policy would need to be tightened somewhat earlier

and by a somewhat greater extent". Gilts collapsed and this spilled over into

other debt markets that definitely included Europe. 

- 10Y Gilt yields rose 8.5bp but the 10Y Bund yield was not far behind with a

5bp rise to 0.795%. At times in the bond market rout, the Bund contract led

other markets lower as technical levels broke and set off stop-losses but the

story was still Bank of England-based.

- Greece successfully sold E3bln of a 7Y security. Initial guidance was

extremely cheap compared to the Greek curve and even the re-offer yield stood at

a large premium. Clearly, this deal needed to go well and the book attracted

E6.8bln. Greek secondary yields re-priced upwards toward the primary market

level. Ireland saw good demand at its 10 and 15Y auctions.

- The ESM announced that Spain will pre-pay E5bln of loans and this will reduce

its 2018 funding target, not doubt increasing Spain's by a similar quantity.

- Core-periphery spreads were mixed on Thursday.