Treasury Action: Treasuries and Bunds have been dragged lower by Gilts
Treasury Action: Treasuries and Bunds have been dragged lower by Gilts, according to traders, as the markets re-price for a potential reduction in stimulus. The market action has seen spreads widen too. The UK's 10-year sovereign is underperforming in ongoing fallout from "hard Brexit" talk, PM May's warnings over "bad side effects" from stimulus, and the drop in GBP to 31-year lows. The 10-year yield is almost 6 bps higher at 0.87%, a rate not seen since September 19. The 10-year Bund yield is over 3 bps higher at -0.012% and is threatening to go positive again. The Treasury note is up 2.5 bps to challenge 1.73%, not seen on a closing basis since June 23, just before the Brexit vote. Spreads have gapped out too, with the Treasury/Bund differential at 174 bps from 170 bps Wednesday and matches the widest since 1999. The Gilt/Bund spread is out 5 bps to 87 bps.