EGBs-GILTS CASH CLOSE: 10Y Yields Close At 2-Month Highs

Bunds and Gilts weakened for a 3rd consecutive session and 5th in 6 on Friday, as rate cuts continued to get priced out.

• With little important data/speaker flow in early trade, core FI continued to drift lower, with hawkishness from some late Thursday speakers still reverberating (BoE's Mann, ECB's Holzmann).
• The only release of note was the seasonal revisions of US CPI, which contrary to many expectations for an upward revision, portrayed largely unchanged inflation at end-2023. That saw Treasuries rally, pushing Bunds and Gilts to session highs, but the move fully reversed.
• The German and UK curves bear flattened as ECB and BoE cut prospects faded further in keeping with the recent theme: 114bp of ECB cuts are priced for 2024, 4bp fewer on the day and ~15bp on the week. BoE 2024 implied cuts pulled back by ~6bp to 76bp, around 21bp on the week.
• 10Y Bund yields posted their highest closing yield since November 30; Gilts since Dec 4. Periphery spreads were little changed.
• Ratings reviews for Germany (Moody's), Finland (Fitch), and Italy (Scope) come after Friday's close.
• Attention next week will be on UK data, with labour market figures (Tues) and CPI (Weds) featuring.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.6bps at 2.716%, 5-Yr is up 5.2bps at 2.336%, 10-Yr is up 2.8bps at 2.382%, and 30-Yr is unchanged at 2.569%.
• UK: The 2-Yr yield is up 4.9bps at 4.602%, 5-Yr is up 4.8bps at 4.1%, 10-Yr is up 3.5bps at 4.086%, and 30-Yr is up 0.4bps at 4.613%.
• Italian BTP spread up 0.7bps at 158.4bps / Greek down 0.5bps at 114.7bps