EGBs-GILTS CASH CLOSE: Bank Sentiment Remains Paramount

The German curve bear flattened for a second consecutive session Tuesday, while the UK's bear steepened.

• Yields jumped at the cash open, in part registering BoE Bailey's hawkish-leaning comments on February inflation data made after Monday's cash close.
• The sell-off continued through mid-morning, on risk-on sentiment as reflected in continued gains in European equities.
• The bearish move petered out over the rest of the session after equities peaked.
• There were few discernible headline drivers to the partial reversal, but it remains evident from intraday movements that banking sector risk sentiment remains the driving cross-asset force for now.
• Periphery spreads were mostly wider, but only marginally, with 10Y BTPs yet again unable to break through the 183bp mark vs Bunds.
• Wednesday brings French consumer sentiment data (following confidence readings on the strong side this morning from France and Italy), with UK money supply and mortgage data later in the session. The BoE's financial policy summary release also bears watching.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 7.1bps at 2.592%, 5-Yr is up 6.9bps at 2.28%, 10-Yr is up 6.3bps at 2.29%, and 30-Yr is up 6.5bps at 2.373%.
• UK: The 2-Yr yield is up 5.3bps at 3.364%, 5-Yr is up 6.6bps at 3.285%, 10-Yr is up 9bps at 3.456%, and 30-Yr is up 5.4bps at 3.861%.
• Italian BTP spread up 1.1bps at 184.8bps / Spanish up 0.1bps at 103.7bps