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Gilts Lead Early Gains With ECB Hawks Eyeing Further Hikes

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Global curves are trading mixed, with the UK outperforming overall in a modest bull steepening move, with US Tsys bull flattening and Germany's twist flattening.

  • It's been fairly quiet on the banking sector risk front for the first time this week, with most attention in the European morning on post-ECB communications.
  • We've heard from multiple hawks (Simkus, Kazimir, Muller) who pointed to potential for further tightening ahead, as well as the more centrist Villeroy who said yesterday's 50bp raise sent a "signal of confidence".
  • Periphery EGB spreads continue to tighten post-ECB, amid a constructive morning for equities.
  • In a mild surprise helping lend a modest tailwind to global rates, China's PBOC announced a cut in banks' Reserve Requirement Ratio.
  • A busy week of US data concludes with Industrial Production and the March prelim UMichigan survey.

Latest levels:

  • Jun US 10-Yr futures (TY) up 8.5/32 at 114-14.5 (L: 114-01.5 / H: 114-21)
  • Jun Bund futures (RX) down 31 ticks at 136.24 (L: 135.76 / H: 136.68)
  • Jun Gilt futures (G) down 17 ticks at 104.91 (L: 104.31 / H: 105)
  • Italy / German 10-Yr spread 3.9bps tighter at 185.9bps

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