Gilts Underperform while BTPs Outperform

It has been a mixed morning so far for core bond markets with Bunds flat, Treasuries slightly higher and gilts a bit lower on the day. Equities are also mixed at the time of writing.

• BOE Governor Bailey made his first speech since last week's MPC meeting and he said that the fact that the Bank is looking into operationally how negative rates would work does not imply that they are close to being implemented. He made the point that negative rates are in the Bank's toolkit and that it made sense that the MPC knew how to use them. Gilts began to underperform on the back of these comments.
• BTPs have continued to move higher on the back of regional election results that have been seen as positive for the ruling parties.
• There are two sovereign syndications underway at present with the UK tapping the 0.50% Oct-61 gilt that was launched in May while the Netherlands are launching a new 0% Jan-52 bond for E4-6bln with books already over E15bln. Germany is also re-opening the 0% Sep-22 Schatz via auction with E5bln on offer.
• Later today we will hear from ECB's Panetta at 13:00BST/8:00ET and Lane at 15:00BST/10:00ET. Fed's Powell will testify before the House at 15:30BST/10:30ET (although text was already released yesterday) and Fed's Evans and Barkin will also both speak.
• TY1 futures are up 0-1 today at 139-19, Bund futures are down -0.07 at 174.58, gilt futures are down -0.18 today at 136.68 and BTP futures are up 0.50 today at 147.36.