EGBs-GILTS CASH CLOSE: Bear Steepening As Month Comes To An End

The UK and German curves bear steepened sharply in the afternoon session with equities rallying and the USD selling off, with some pointing to month-end dynamics at play. Periphery spreads largely tightened with risk appetite picking up.

A parade of central bank speakers from Lagarde to Haldane failed to move the needle much; neither did morning data (weak French and Italian CPI / stronger-than-expected German retail sales / not-as-bad-as-expected UK investment).

French and Spanish supply in focus for Thursday, plus Spain/Italy PMIs (along with the rest of Europe's final PMIs). Closing levels:

• Germany: The 2-Yr yield is up 0.9bps at -0.701%, 5-Yr is up 1.5bps at -0.71%, 10-Yr is up 2.3bps at -0.522%, and 30-Yr is up 2.6bps at -0.094%.
• UK: The 2-Yr yield is up 3bps at -0.023%, 5-Yr is up 2.9bps at -0.056%, 10-Yr is up 4.5bps at 0.229%, and 30-Yr is up 6.2bps at 0.782%.

10-Yr Periphery EGB Spreads:

• Italian BTP spread down 0.9bps at 138.8bps
• Spanish bond spread unchanged at 77bps
• Portuguese PGB spread up 0.2bps at 78.5bps
• Greek bond spread down 1.5bps at 154.8bps