Thirty year EU bonds have widened about 20bp since November

Liquidity in the interdealer market for SSA bonds dried up this week, underscoring a palpable sense of risk aversion illustrated by a widening in the Bund-swap spread to levels not seen for a decade.

Tuesday’s €5bn tap of the European Union’s bonds due 2051 performed well, with short covering interest expected to drag the curve tighter, said rates traders

Covered bond and rates traders were constructive on the near term prospects for those markets on Tuesday despite some uncertainty about the effect of central bank policy and forthcoming issuance from the EU

Investors sell short notes to make room for longer deals with concessions

The rates market has been broadly stable this week as players speculated about the maturity of the EU’s impending bond auction, investors locked in profits amid rising rates and as the long end of the covered bond curve weakened

Demand for the EFSF’s latest transactions may have been large, but the lack of quality interest ensured a damp reception in the secondary market, said unimpressed rates traders

A steep rise in yields since Christmas has helped propel demand for rates products, especially in the 10 year area, said bankers on Tuesday

The European Union's curve tightened on Tuesday after it announced lower than expected funding needs ahead of Thursday’s ECB meeting, where more dovish flexibility is expected

Underperforming OATs have created a raft of relative value opportunities but these are being ignored as market participants look to square off their books before the end of the year

The spread of the Omicron variant has sparked a bid for safe haven assets

Liquidity in the rates market is becoming more difficult to source leaving it vulnerable to more pronounced volatility, said traders on Tuesday