EGBs-GILTS CASH CLOSE: Bear Flattening With More BoE Hikes Priced

European curves bear flattened Wednesday, with the UK leading losses for a second straight day on more data spurring higher BoE hike expectations.

• March UK inflation surprised to the upside, which with Tuesday's strong wage growth data cemented a May 25bp hike and led BoE terminal rate pricing to close above 5% for the first time since October (up 15bp on the day).
  
• ECB pricing lagged but still rose 4bp for a fresh post-Credit Suisse crisis high.
  
• An MNI article published in late afternoon cited ECB sources as saying the Governing Council looks set to hike 25bp in May with at least one further 25bp increase this summer, and a pause currently foreseen to into 2024.
  
• Periphery EGBs were mixed, with BTP spreads widening, and GGBs tightening following a solid 2033 auction.
• BoE's Mann speaks after hours; German PPI and various eurozone confidence indices feature early Thursday, while later in the session we get accounts of the ECB's March meeting with appearances by Visco, Holzmann and Schnabel.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.2bps at 2.968%, 5-Yr is up 4.6bps at 2.566%, 10-Yr is up 3.8bps at 2.515%, and 30-Yr is up 1.9bps at 2.552%.
• UK: The 2-Yr yield is up 13.9bps at 3.83%, 5-Yr is up 12.8bps at 3.716%, 10-Yr is up 10.9bps at 3.856%, and 30-Yr is up 8.5bps at 4.183%.
• Italian BTP spread up 2.4bps at 184.8bps / Greek down 4bps at 181.4bps