BONDS: EGBs-GILTS CASH CLOSE: Core Yields Edge Lower For Third Day

Core European yields closed lower Wednesday for the third day this week.

• After a modestly constructive start on limited data and newsflow, Bund and Gilt yields fluctuated in mid-afternoon as the release of US payroll revisions proved messy.
• Ultimately core FI gained going into the European cash close, as the delayed data release showed downward revisions on the high end of expectations.
• ECB's Panetta noted that a "phase of loosening" likely laid ahead, while the UK saw higher-than-expected public sector net borrowing. Neither had much tangible market impact.
• The German and UK curves leaned bull steeper, while EGB periphery spreads tightened modestly.
• The main focus for the week continues to be on Thurs/Fri, which bring August flash PMIs, Eurozone national accounts/negotiated wages, and the Fed's Jackson Hole symposium.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 5bps at 2.357%, 5-Yr is down 3.6bps at 2.106%, 10-Yr is down 2.4bps at 2.191%, and 30-Yr is down 0.8bps at 2.429%.
• UK: The 2-Yr yield is down 2.7bps at 3.664%, 5-Yr is down 3.2bps at 3.701%, 10-Yr is down 2.4bps at 3.891%, and 30-Yr is down 1.3bps at 4.441%.
• Italian BTP spread down 1.1bps at 136.7bps / Spanish down 1.4bps at 81.3bps