BONDS: EGBs-GILTS CASH CLOSE: Bear Flattening In Germany As ECB Cuts Fade

European curves flattened Monday, with Bunds underperforming Gilts.

• Yields rose for most of the morning session , with pronounced weakness at the German short end as ECB rate cut pricing pulled back some of its recent increase.
• ECB's Stournaras noted that a December cut was more or les  a "done deal" - drawing a hawkish reaction given partial market pricing for a 50bp cut, and Stournaras's pointing out that neutral rates could lie at 2% (115bp from here). At one point just 136bp of further cuts were seen through 2025.
• Bonds stabilized in the afternoon, shrugging off a supply-disruption related jump in oil prices, as equities and the US dollar softened.
• The German curve bear flattened, with the UK's twist flattening. Periphery EGB spreads tightened slightly, after widening midway (BTPs/Bunds came in 3+bp from session wides).
• Tuesday's calendar includes Eurozone current account data and final October HICP, as well as appearances by senior BOE members including Gov Bailey. The week's European data highlights come Wednesday (UK CPI) and Friday (November flash PMIs).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.9bps at 2.181%, 5-Yr is up 2.7bps at 2.203%, 10-Yr is up 1.7bps at 2.373%, and 30-Yr is up 0.5bps at 2.579%.
• UK: The 2-Yr yield is up 1.8bps at 4.417%, 5-Yr is up 0.8bps at 4.336%, 10-Yr is down 0.6bps at 4.465%, and 30-Yr is down 1.2bps at 4.912%.
• Italian BTP spread down 0.2bps at 119.6bps / Spanish down 0.4bps at 69.7bps