EGBs-GILTS CASH CLOSE: Bear Flatter In An Otherwise Bull Flattening Week

The German and UK curves bear flattened Friday to take the shine off an otherwise stronger week, with an above-expected headline US job gain accelerating yield rises in the afternoon.

• In an otherwise quiet session for headlines and data, ECB and BoE hike pricing finished marginally higher on the day, in a partial reversal of the recent pullback.
• Indeed, Friday's bear flattening came in the broader context of a soft-Eurozone CPI induced bull flattening this week. UK 2Y yields closed down 14bp on the week despite a 7bp rise today; 10Y Gilts finished the week down nearly 18bp, offset by a 4bp rise Friday.
• Similarly in Germany, Schatz rose by 9bp today but were down 14bp on the week; a 6bp yield rise in 10Y Bund today meant a weekly drop of "only" 23bp.
• A risk-on atmosphere following the US Congress's passage of a debt limit deal helped periphery EGB spreads tighten, with BTPs and GGBs outperforming.
• Friday's UK and France sovereign ratings reviews by Fitch and S&P respectively will garner attention after hours, though a 1.5bp drop in the 10Y OAT/Bund spread suggested little evident market concern for France.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 8.4bps at 2.802%, 5-Yr is up 9.2bps at 2.337%, 10-Yr is up 6.3bps at 2.312%, and 30-Yr is up 3.3bps at 2.489%.
• UK: The 2-Yr yield is up 7.2bps at 4.363%, 5-Yr is up 5.2bps at 4.102%, 10-Yr is up 4bps at 4.156%, and 30-Yr is up 2.1bps at 4.48%.
• Italian BTP spread down 8.1bps at 175.8bps / Greek down 10.4bps at 137.5bps