EGBs-GILTS CASH CLOSE: A Poor Week Ends On A Soft Note

Core European FI ended a poor week on a soft note, with UK and German yields up 2-3bp across most of their respective curves. 10Y Gilt yields closed the week 18bp higher for their their worst week in the past five.

• "Higher for longer" has been a resurgent theme in rates this week, with Friday's session bringing multiple cautionary comments by central bank officials on that front (BoE's Pill, ECB's Lagarde/Holzmann/Guindos).
• That - and a slightly hawkish tilt to US rates in the afternoon, amid a holiday period - helped pull back ECB/BoE cut pricing further, and kept a lid on Bunds and Gilts, carrying on from previous sessions' weakness on broadly stronger-than-expected European PMI data and issuance concerns in Germany and the UK.
• The German curve saw weakness focused on the short- and very long ends, with the UK's twist steepening as 2Y yields fell.
• Periphery spreads were mostly tighter to Bunds, with Greece outperforming, and Portugal lagging.
• The focus next week will be flash November Eurozone inflation data, which is expected to continue the disinflationary theme seen in recent reports.

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

• Germany: The 2-Yr yield is up 2.8bps at 3.072%, 5-Yr is up 2bps at 2.616%, 10-Yr is up 2.4bps at 2.643%, and 30-Yr is up 3.1bps at 2.819%.
• UK: The 2-Yr yield is down 0.5bps at 4.711%, 5-Yr is up 2.1bps at 4.33%, 10-Yr is up 2.6bps at 4.283%, and 30-Yr is up 2.3bps at 4.746%.
• Italian BTP spread down 1.6bps at 175.5bps / Portuguese up 2bps at 66.6bps