EGBs-GILTS CASH CLOSE: From Flattening To Steepening

With little in the way of data or speakers and no supply Monday, markets moved to the rhythm of equity risk on/off, which ultimately resolved in the risk-off direction amid concerns over US-China tensions.

Early flattening gave way to bull steepening for the UK and German curves as the respective bellies outperformed. The Bund rally left peripheries behind, with spreads widening slightly for the most part, though Greece severely underperformed (10-Yr spread 5+bps wider).

Attention turns to Tuesday's UK labour market data first thing Tuesday morning, with German ZEW numbers out later on. Closing levels:

• Germany: The 2-Yr yield is down 2bps at -0.703%, 5-Yr is down 2.3bps at -0.712%, 10-Yr is down 1.7bps at -0.526%, and 30-Yr is down 1.2bps at -0.103%.
• UK: The 2-Yr yield is down 0.6bps at -0.029%, 5-Yr is down 0.6bps at -0.074%, 10-Yr is down 0.8bps at 0.131%, and 30-Yr is up 0.3bps at 0.679%.

10-Yr Periphery EGB Spreads:

• Italian BTP spread up 0.9bps at 144.6bps
• Spanish bond spread down 0.6bps at 78.1bps
• Portuguese PGB spread down 0.8bps at 79.8bps
• Greek bond spread up 5.4bps at 157.7bps