Gilts Underperform

EGBs have traded firmer this morning alongside further downside for gilts and modest equity gains.

• Gilts have underperformed with the 30-year yield hitting 1% for the first time since March. Yields at the longer end are now 2bp higher on the day.
• There is some speculation that the prospect of a UK-EU trade deal may have marginally improved after incoming US President Joe Biden urged UK PM Boris Johnson not to undermine the Good Friday Agreement in reference to Downing Street's controversial Internal Markets Bill. Biden had previously indicated that passing the bill would limit prospects for a UK-US trade.
• Bunds have traded firmer with the curve close to flat. Last yields: 2-year -0.724%, 5-year -0.7074%, 10-year -0.4959%, 30-year -0.0601%.
• OATs have marginally outperformed bunds on the day with yields edging down 1-2bp across the curve.
• The BTP curve has marginally bull flattened with the 2s30s spread 1bp narrower.
• Supply this morning came from the UK (linker, GBP0.80bn), Germany (bund, EUR0.849bn) and Italy (BOTs, EUR5.5bn).
• The UK government earlier announced new powers to intervene in foreign takeovers of British companies that could pose a threat to national security.