EGBs-GILTS CASH CLOSE: Bear Flattening On ECB 50bp Hike And Bank Relief

The UK and German curves bear flattened Thursday and periphery EGB spreads tightened as the ECB delivered a 50bp hike and concerns over US and European banks dissipated somewhat.

• Yields initially rose on overnight news that Credit Suisse was strengthening its liquidity position.
• With a better-than-even probability of 25bp or a hold priced in going into the ECB decision vs a 50bp hike, the half-point raise surprised to the upside.
• But the overall takeaway was slightly more dovish, with the ECB shying away from providing guidance on further hikes.
• MNI Sources reported afterward that all of the four or so dissenters preferred no hike at all rather than a smaller 25bp move.
• EGB yields fell through Lagarde's press conference and bottomed for the day as it wrapped up, then rose on diminished banking sector panic with major US institutions reportedly propping up troubled First Republic Bank.
• An appearance by ECB's Simkus features early Friday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 19.9bps at 2.608%, 5-Yr is up 18.1bps at 2.318%, 10-Yr is up 16bps at 2.29%, and 30-Yr is up 16.7bps at 2.312%.
• UK: The 2-Yr yield is up 12.3bps at 3.415%, 5-Yr is up 12.8bps at 3.342%, 10-Yr is up 10.4bps at 3.425%, and 30-Yr is up 9.8bps at 3.853%.
• Italian BTP spread down 8.3bps at 189.8bps / Greek down 9.9bps at 200.3bps