European Fixed Income Update:

European Fixed Income Update: Sentiment is stabilising and yields are moving higher in tandem with stock markets. German production data at the start of the session was hardly upbeat and in fact highlighted recession risks, as the 3-months trend rate signaled an accelerated pace of contraction. That didn't stop stocks from bouncing and the DAX is currently up 1.4%, the Euro Stoxx 50 1.5%. Similarly, the FTSE 100 was once again undeterred by the prospect that PM Johnson will announce his resignation today. The U.K.'s main index still managed to move up 1.2% and that despite the fact that the prospect of Johnson's departure has been boosting Sterling this morning. Cable managed to lift above the 1.20 mark as the pound gained against a wide range of currencies. Yields moved higher and in Europe at least curves flattened as the short end underperformed. The German 10-year rate is currently up 7.8 bp at 1.28%, the Gilt rate has lifted 6.4 bp to 2.15%, while the Treasury yield gained 2.6 bp to 2.95%. Thin summer trade may be exaggerating moves, but it seems sentiment has been improving overall and for now at least stocks are not phased by the uptick in yields, which also seem to reflect improved confidence in the economy. The tech sector was boosted by company reports and the prospect of a huge stimulus boost in China is also helping to strengthen confidence.