Periphery yields follow core EGBs lower, but the BTP/Bund spread has continued its grind higher to trade 3.8bps wider on the day at 204.5bps.
- The turning point in EGBs has been partially related to French headlines, where a number of airports have been evacuated after "threats of attack".
- Italy underperforms, with the BTP 2s10s curve bear steepening to trade 1.6bps wider at 82.0bps. The Italian exchange auction earlier will have provided pressure to BTPs (selling longer-maturity BTP supply in exchange for BTP Short Term/BTP Italia's), while the Italian trade balance and in-line eurozone final September inflation were not market movers.
- Portugal is once again the periphery outperformer, the 10-yearPGB/Bunds is 0.8bps tighter at 72.1bps.