EGBs-GILTS CASH CLOSE: Steady Rally

European bonds rallied for most of Monday's session following some weakness at the open, amid light trading volume with holidays in several countries (including France, Germany, Italy, and Spain).

• The fall in yields came amid a sharp drop in oil prices (Brent -4%) and unexpectedly weak economic data overnight in China and in the afternoon from the US.
• Apart from the steady drop in yields throughout the session, there were few key themes: German yields outperformed the UK in the short-end/belly, but the converse was true further down the curve.
• No bond issuance (back Tuesday w Gilt and Bobl auctions), key data (UK employment and German ZEW feature Tuesday), or central bank speakers.
• Greek debt underperformed, with the 10Y spread to Bunds nearly 4bp wider (other periphery EGB spreads were relatively unchanged).

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

• Germany: The 2-Yr yield is down 7.8bps at 0.53%, 5-Yr is down 7.7bps at 0.678%, 10-Yr is down 8.7bps at 0.9%, and 30-Yr is down 8.2bps at 1.155%.
• UK: The 2-Yr yield is down 2.1bps at 2.032%, 5-Yr is down 7.6bps at 1.855%, 10-Yr is down 9.4bps at 2.017%, and 30-Yr is down 10.1bps at 2.435%.
• Italian BTP spread down 0.8bps at 207.5bps / Greek up 3.7bps at 228.9bps