EGBs-GILTS CASH CLOSE: Bear Flattening Ahead Of French/German Inflation

The UK and German curves bear flattened Tuesday with Gilts underperforming, ahead of multiple

• After a positive overnight session for global core FI, in part following Monday's late announcement of a lower-than-expected US Treasury borrowing requirement, EGBs reversed lower after Spanish flash Jan inflation came in firmer than expected. (Eurozone Q4 GDP wasn't as bad as feared.)
• Gilts would hit higher levels in the session but Bunds didn't recover, with both dragged down by Treasuries in early afternoon after data showed a surprising rise in US job vacancies - a key metric eyed by the Fed, ahead their decision tomorrow. Higher oil prices kept the pressure on.
• Periphery EGB spreads finished wider, with BTPs cheapening after the announcement of a 15Y syndication. (Today also saw BTP auctions, plus German/Greek bond syndications.)
• The highlight early Wednesday will be French and German state-level inflation data - our Eurozone inflation preview was published today and is available here.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.1bps at 2.5154%, 5-Yr is up 3.8bps at 2.164%, 10-Yr is up 3.3bps at 2.268%, and 30-Yr is up 2.6bps at 2.496%.
• UK: The 2-Yr yield is up 7.1bps at 4.339%, 5-Yr is up 5bps at 3.857%, 10-Yr is up 2.5bps at 3.901%, and 30-Yr is up 2.4bps at 4.53%.
• Italian BTP spread up 3bps at 152.9bps / Spanish up 1bps at 90.3bps