BONDS: EGBs-GILTS CASH CLOSE: Gilts Gain, Shrugging Off Firm UK CPI
Aug-20 17:52
EGBs and Gilts rallied Wednesday.
- Gilts outperformed despite UK inflation data coming out on the firmer side of expectations. MNI's Markets Team saw little in the way of "game-changing" information in the report in terms of the BOE's approach to policy, with headline inflation just 7 hundredths above the BOE's forecast at 3.83%Y/Y in July (MNI median 3.7%, BOE 3.76%, 3.58% in June) and much of the upside surprise driven by volatile airfares/accommodation prices.
- Yields descended through much of the session from there, with a further firming notable in Bunds in mid-afternoon as US tech stocks dipped sharply (albeit without any headline trigger).
- In other data, Eurozone final HICP showed marginal upward revisions to the core and services measures.
- Meanwhile, ECB's Lagarde said that uncertainty has been "alleviated, but certainly not eliminated" though this had little impact on rate pricing.
- On the day, the belly outperformed on the German curve, while the UK curve bull flattened. Periphery/semi-core spreads to Bunds closed little changed.
- Thursday's schedule includes flash August PMIs and UK public finance data.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.5bps at 1.933%, 5-Yr is down 3.3bps at 2.273%, 10-Yr is down 3.3bps at 2.717%, and 30-Yr is down 2.9bps at 3.294%.
- UK: The 2-Yr yield is down 5.8bps at 3.922%, 5-Yr is down 6.2bps at 4.076%, 10-Yr is down 6.8bps at 4.672%, and 30-Yr is down 7.1bps at 5.531%.
- Italian BTP spread up 0.3bps at 80.8bps / French OAT up 1.2bps at 69.5bps
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SECURITY: Ukraine-Russia Meeting Planned Wednesday: Bloomberg
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BONDS: EGBs-GILTS CASH CLOSE: Bull Flatter On Trans-Atlantic Tariff Threats
Jul-21 17:39
European curves bull flattened Monday.
- The EGB / Gilt rally started overnight following a weekend Bloomberg report that the EU was set to formulate a plan to retaliate against the US in case of a "no deal" scenario on tariffs by the White House-set Aug 1 deadline.
- This followed Friday's FT report that US President Trump was seeking a minimum 15-20% EU tariff.
- Indeed the trade conflict appeared to be a broader undercurrent, with some anticipation of the swiftly-approaching Aug 1 date more broadly boosting long-end FI and weakening the USD (although a rise in equities appeared to be an outlier in this move).
- Helping the bullish move follow through in mid-afternoon was a well-received BoE long-end APF sale which saw bull flattening extend.
- Carrying on from last week's trend, Gilts underperformed, but both the UK and German curves bull flattened on the day.
- Periphery and semi-core EGB spreads tightened, with 10Y OAT/Bund down more than 2bp.
- This week's calendar highlights include flash PMIs and of course the ECB decision Thursday - our preview of the latter will be out Tuesday.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 4.6bps at 1.824%, 5-Yr is down 7.2bps at 2.168%, 10-Yr is down 8.2bps at 2.613%, and 30-Yr is down 9.3bps at 3.139%.
- UK: The 2-Yr yield is down 3.3bps at 3.869%, 5-Yr is down 5.4bps at 4.035%, 10-Yr is down 7.1bps at 4.603%, and 30-Yr is down 8.3bps at 5.428%.
- Italian BTP spread down 1.8bps at 83.7bps / French OAT down 2.5bps at 67.9bps
MNI EXCLUSIVE: Interview with British Columbia's Energy Minister
Jul-21 17:35
- MNI interviews British Columbia's energy minister on energy sector projects -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
