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EGBs-GILTS: Lower Then Higher After BoE, German Factory Data

BOND SUMMARY

A back-and-forth start for Gilts and Bunds. German bonds weakened sharply on much stronger than expected Jun factory orders data, then rocketed to session highs a little after 0800BST with no particular headline catalyst. And Gilts weakened on the open after a more optimistic-than-expected BoE, but have moved sharply higher alongside Bunds.

Bull flattening in both curves. This despite a sharp move higher in equities after 0800BST. Periphery EGB spreads a little tighter.

Italy Jun IP data out at 0900BST; BoE embargoed press conference comments released at 1000BST.

It's the heaviest supply day of the week: we get up to E4.5B in Spanish bond sales, with France selling up to E9B. ** Latest levels:

  • Sep Bund futures (RX) up 18 ticks at 177.28 (L: 176.92 / H: 177.32)
  • Sep Gilt futures (G) up 10 ticks at 138.23 (L: 137.86 / H: 138.28)
  • Sep BTP futures (IK) up 30 ticks at 147.66 (L: 147.28 / H: 147.76)
  • Italy / German 10-Yr spread 0.5bps tighter at 147.3bps

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