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Bears Pause For Breath


Services PMI 58.5


Extending gains


Retail Sales Rises By 5.7% In October

Fig. 1: Gilts Outperform


EGB SUMMARY: All eyes on US elections

EGBs have traded within the morning ranges, as investors and market participants prepare for a huge risk event week.

  • German curve has reversed some of the bear flattening noted during the morning session, to trade flat at the time of typing.
  • Peripheral have traded mixed, with Spain 0.4bp tighter versus the German 10yr, while Greece sits 1.4bp wider.
  • Looking ahead, all eyes on the US election, with some of the results expected tomorrow night.
  • Dec Bund futures (RX) up 8 ticks at 176.23 (L: 175.9 / H: 176.32)
  • Germany: The 2-Yr yield is down 0.2bps at -0.796%, 5-Yr is up 0.2bps at -0.818%, 10-Yr is down 0.6bps at -0.633%, and 30-Yr is down 0.6bps at -0.224%.
  • Dec BTP futures (IK) down 4 ticks at 149.55 (L: 148.97 / H: 149.63)
  • Italy / German 10-Yr spread 0.7bps tighter at 138bps
  • Dec OAT futures (OA) up 6 ticks at 170.17 (L: 169.85 / H: 170.23)
  • Spanish bond spread down 0.4bps at 75.8bps
  • Portuguese PGB spread down 0.3bps at 72.9bps
  • Greek bond spread down 1.5bps at 156.1bps

GILT SUMMARY: Lockdown and QE expectations help gilts outperform

Gilts have been the outperformers in core fixed income space today following the weekend announcement that England would begin a nationwide lockdown beginning Thursday with the intention of it lasting four weeks.

  • Some analysts have changed their calls ahead of Thursday's Monetary Policy Report and the consensus is now even more firmly looking for a GBP100bln extension to QE. Cementing this expectation into market pricing has helped the gilt rally today.
  • Gilts have broken above Friday's high of 136.08 (the first resistance level noted by our technical analyst). Attention now shifts to 136.38, the Oct 20 low, to close the gap on the chat.
  • 2y yields down -3.3bp today at -0.71%
  • 5y yields down -3.1bp today at -0.71%
  • 10y yields down -3.8bp today at 0.222%
  • 30y yields down -4.1bp today at 0.787%
  • 2s10s down -0.5bp today at 29.3bp
  • 10s30s down -0.3bp today at 56.5bp


  • RXZ0 172.50p, bought for 3.5 and 4 in 4k total
  • DUZ0 112.40p, bought for 3.5 in 6kDUZ0 112.40p, bought for 3.5 in 6k
  • L M1 100.00/100.125/100.25/100.375 c condor, bought for 3 in 4k
  • 0LU1 100.00/99.87ps 1x2, bought the 2 for 1.5 in 1.5k
  • LF1 100^, bought for 7.5 in 500
  • LH1 99.87/100/100.12c 1x3x2, bought for 2.5 in 5k
  • LH1 100/100.12/100.25c fly, bought for 2 in 1.5k


MNI London Bureau | +44 203-865-3807 |
MNI London Bureau | +44 203-865-3807 |