MNI EUROPEAN CLOSING FI ANALYSIS

LONDON (MNI) -

Fig 1: US Durables Goods Orders, % M/M

Source: MNI, Bloomberg

• Markets continue to focus on a potential second wave of Covid cases in Spain but there is little more colour on the situation than this morning.
• Spanish spreads haven't been hit any more than other peripheral spreads with all peripherals seeing spreads around 4bp wider on the day.
• This is despite Spanish stocks being hit harder than other stocks across the region.
• Bund futures are up 0.61 today at 176.70 with 10y Bund yields down -3.6bp at -0.485% and Schatz yields down -1.2bp at -0.674%.
• BTP futures are up 0.08 today at 146.97 with 10y yields up 0.3bp at 0.999% and 2y yields up 0.9bp at -0.64%.
• OAT futures are up 0.54 today at 168.39 with 10y yields down -3.3bp at -0.182% and 2y yields down -0.8bp at -0.628%.

GILT SUMMARY: BULL FLATTENING
Gilts have remained bid through the session with yields edging down to the lows of the day, alongside weak trading in equities.

• The Sep-20 Gilt future has traded up to 138.31, near the top of the day's range and 3 ticks off the high. -
• Cash yields are 1-2bp lower and the curve has bull flattened with the 2s10s spread 2bp narrower on the day.
• Current yield levels: 2-year -0.1063%, 5-year -0.1259%, 10-year 0.1148%, 30-year 0.6290%
• The DMO will tomorrow sell the 1.625% Oct-54 Gilt for GBP1.5bn and the 1.25% Jul-27 Gilt for GBP2.75bn.
• Tomorrow will see the release of the Lloyds Business Barometer for July, as well as the CBI Retailing Reported Sales data for the same month