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EURIBOR OPTIONS

Blue put fly buyer

OPTIONS

Expiries for Sep16 NY cut 1000ET (Source DTCC)

FRANCE AUCTION RESULTS

5/10/20-year OATei

EGB SYNDICATION

Austria 15-year syndication: Launched

BONDS

Bear steepening

GILT SUMMARY
GILT SUMMARY: Gilts have been under pressure from the get-go, led by sell-off in
the 5-yr to 10-yr sector, weighed by fall in German Bunds, but have managed to
bounce off session lows in last 30mins or so.
- 2-yr Gilt yield is +1.7bp at 0.81%, 5-yr +2.9bp at 1.166%, 10-yr +3.2bp at
1.479%, 30-yr +2.5bp at 1.899% and 50-yr +2.5bp at 1.70%.
- There has been a dearth of either UK or European data Monday, but comments
from central banker's has weighed on bond markets. ECB Villeroy came across
slightly hawkish, saying QE could end in Sep or Dec and a change in rates could
come quarters and not years afterwards. While Fed's Mester had a positive
outlook for the economy and said gradual rate hikes mean 3 to 4 hikes a year.
- In the UK attention remains on the divisions within the Tory cabinet on what
type of customs arrangement to try and negotiate with the EU, with a meeting set
for Tuesday to discuss latest developments. While Latest labour data will be
released tomorrow as well.
- Short Sterling strip is steady, curve steeper as blue contract fall 2 to 3
ticks. Breakevens are ~0.5bp wider, while swap spreads are little changed.