EGBs-GILTS CASH CLOSE: Reversal Sees Bear Steepening Curves

Core FI faded early gains, with the UK and German curves bear steepening Monday.

• Periphery EGB spreads tightened, while French OATs outperformed following weak results for Le Pen in weekend regional elections.
• Bunds weakened on headlines that German gov't net borrowing would hit ~E100bn next year (this had already been reported last week so unclear why there was a reaction).
• ECB Pres Lagarde said US inflation spillovers to the Eurozone are seen as being limited, while tightening market rates would pose a risk to the recovery. Meanwhile, ECB net asset purchases bounced back last week, with PEPP buys at a 4-week high of E19.4B.
• Tuesday sees UK fiscal data and a few ECB speakers; the Netherlands sells up to E2bln of DSL. Note Spain announced 10-Yr syndication.

Closing German/UK Yields And 10-Yr Spreads To Germany

• Germany: The 2-Yr yield is up 1.5bps at -0.652%, 5-Yr is up 2.7bps at -0.561%, 10-Yr is up 2.9bps at -0.171%, and 30-Yr is up 5.2bps at 0.303%.
• UK: The 2-Yr yield is down 0.5bps at 0.125%, 5-Yr is up 0.4bps at 0.385%, 10-Yr is up 1.7bps at 0.769%, and 30-Yr is up 2.2bps at 1.227%.
• Italian BTP spread down 2.5bps at 104.7bps/ Spanish down 3bps at 62.5bps