EGBs-GILTS CASH CLOSE: Afternoon Reversal

Yields reversed higher in afternoon trade, nullifying strength in the morning and leaving Gilts and Bunds largely unchanged Tuesday.

• European FI largely followed Treasuries in the afternoon - counterintuitively, weaker-than-expected US retail sales data saw Global core bonds sell off, with dollar strength.
• Gilts outperformed with bull flattening in the UK curve, while periphery spreads ended marginally wider.
• Strong auctions: UK sold GBP2.0bln of 25-year gilt, Germany E6bbln of Schatz.
• UK employment and Eurozone GDP data were in line with expectations.
• Wednesday's highlights: UK July inflation data and 30Yr Bund supply.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.3bps at -0.736%, 5-Yr is down 0.2bps at -0.729%, 10-Yr is down 0.1bps at -0.47%, and 30-Yr is unchanged at -0.02%.
• UK: The 2-Yr yield is up 0.8bps at 0.152%, 5-Yr is unchanged at 0.302%, 10-Yr is down 0.8bps at 0.565%, and 30-Yr is down 1.5bps at 0.946%.
• Italian BTP spread up 0.9bps at 104.3bps / Spanish up 0.6bps at 69.9bps