European Fixed Income Summary

European debt futures are up on the day with Bunds outperforming after today's ECB announcement, which confirmed that rates are on hold for a protracted period. Gilts underperformance was supported by the 30-year Gilt auction (which sent Gilts sharply lower), BoEspeak and credit conditions survey (see below). Today's European calendar had eurozone May producer prices, which dropped to -5.8% y/y (median -5.6% y/y) from -4.6% y/y in the previous month. Meanwhile, the unemployment rate jumped to 9.5% (median 9.3%) In the U.K., the BoE Q2 Credit Conditions Survey showed increased availability of corporate credit, but rising spreads, meanwhile the construction PMI fell back to 44.5 in June, from 45.9. Elsewhere, the Riksbank unexpectedly cut the repo rate by 25bp to 0.25% (median was for a steady 0.50% rate) and the SNB suggested it may broaden its range of collaterals. As of 15:23GMT the September 10-year Bund future is up 72 ticks on the day at 121.64, while the corresponding Gilt future is up 26 ticks at 117.64. In the cash market the 10-year Bund yield is down 8 bp at 3.33% and the 10-year Gilt yield is down 3 bp at 3.74%.