BONDS: EGBs-GILTS CASH CLOSE: Slightly Stronger, Shrugging Off FX Move

EGBs and Gilts closed a little stronger Thursday, shrugging off larger cross-market moves.

• The biggest moves in the space occurred in early trade, Bunds/Gilts rallying on reports that Russia may have conducted an attack on Ukraine using an ICBM.
• The afternoon's standout moves in European markets were in FX, with equities rising strongly from session lows and EURUSD falling quickly to fresh cycle lows below 1.05. The latter move was seen as both fix-related and came alongside headlines that Spain's lower house approved a tax package that included an extension to a bank windfall tax, while Volkswagen workers were said to be set to strike in December.
• Core FI largely shrugged off the move: both the UK and German curves closed bull steeper. But the impact was seen more acutely in periphery EGBs, which saw spreads reverse earlier tightening.
• OATs continued to underperform, with 10Y spreads to Bunds widening 3bp as political and fiscal concern lingered.
• On that note, eurozone consumer confidence fell to a 6-month low, amid political uncertainty on both sides of the Atlantic.
• BOE hawk Mann continued to express support for for higher for longer rates until there is a change in underlying inflation dynamics.
• Attention Friday will be on November flash PMIs.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany