EGBs-GILTS CASH CLOSE: Bear Flattening Around Split BoE Decision

The Gilt curve bear flattened Thursday while periphery spreads tightened sharply.

• The BoE outcome was largely as expected, including a split 7-1 vote, though as our Policy Team put it, their tightening strategy review "opens the door to earlier QT". Gilts weakened sharply after the decision but had fully recovered by the time the press conference started an hour later.
• The afternoon saw global core FI weaken anew though, with Bunds coming off session highs and Gilts retesting Wednesday's lows.
• Earlier, German factory orders beat expectations. In supply, Spain sold E4.7bln of Bono/Obli, while France sold E7.5bln of LT OAT.
• Friday sees Belgium conduct an ORI for E0.5bln. Most attention will be on US payrolls data.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.5bps at -0.776%, 5-Yr is up 0.6bps at -0.762%, 10-Yr is up 0.3bps at -0.498%, and 30-Yr is down 0.7bps at -0.047%.
• UK: The 2-Yr yield is up 2.9bps at 0.092%, 5-Yr is up 1bps at 0.234%, 10-Yr is up 1.2bps at 0.524%, and 30-Yr is up 0.2bps at 0.935%.
• Italian BTP spread down 2.6bps at 102.8bps / Spanish down 2.8bps at 70.3bps