BONDS: EGBs-GILTS CASH CLOSE: Rally Extends Amid Mixed US Jobs Data

Core European yields fell for a third consecutive session Thursday, with US labour market data continuing to guide direction ahead of Friday's key nonfarm payrolls release.

• Bunds and Gilts started on the back foot, with EGBs weighed down by heavy Spanish and French supply, and a stronger-than-expected headline German factory orders reading.
• US data including a below-expected ADP private payrolls figure helped boost global core FI in early afternoon trade, with Bund and Gilt futures hitting session highs, but the rally was pared later in the session due in part to a solid US ISM Services report.
• The German and UK curves bull steepened onthe day, with Gilts outperforming slightly overall.
• Periphery EGB spreads were little changed, with BTPs rising from intraday tights set after the announcement of Michel Barnier as the new French PM.
• Most focus Friday will be on the US employment report; we also get German and French industrial production data, and the final reading of Eurozone Q2 GDP which will include key details on labour costs ahead of next week's ECB meeting.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.7bps at 2.296%, 5-Yr is down 1.6bps at 2.095%, 10-Yr is down 1.6bps at 2.208%, and 30-Yr is down 1.5bps at 2.456%.
• UK: The 2-Yr yield is down 2.5bps at 4.006%, 5-Yr is down 2.5bps at 3.808%, 10-Yr is down 2bps at 3.915%, and 30-Yr is down 2.5bps at 4.443%.
• Italian BTP spread down 0.4bps at 143.2bps / Spanish down 0.5bps at 81.2bps