EGBs-GILTS CASH CLOSE: 10Y Yields Hit August Highs

The German and UK curves bear steepened Thursday as some of the prior session's post-US CPI dovishness was reconsidered.

• The second weak US inflation print in as many days (PPI) saw limited immediate reaction, and the follow-through was actually bearish with Bund and Gilt yields reversing higher from session lows and steepening accelerating.
• Gilts underperformed Bunds, though 10Y yields on both curves hit their highest levels of the month - with the recent caveat that trading volumes today were very limited in typical August trade.
• Periphery spreads compressed despite a fairly soft tone in overall risk appetite (equities were flat/lower on the day).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is up 2bps at 0.566%, 5-Yr is up 5.6bps at 0.712%, 10-Yr is up 8.3bps at 0.971%, and 30-Yr is up 10.2bps at 1.229%.
• UK: The 2-Yr yield is up 5.5bps at 2.002%, 5-Yr is up 8.2bps at 1.882%, 10-Yr is up 10.8bps at 2.059%, and 30-Yr is up 11.3bps at 2.449%.
• Italian BTP spread down 5.4bps at 205.9bps / Greek down 4.2bps at 226.6bps