EGBs-GILTS CASH CLOSE: Bear Steepening Reverses

The session began with a bear-steepening sell-off and ended with a duration rally for Gilts and Bunds.

• No discernable headline trigger for the reversal, with equities higher for most of the afternoon (before a late fade), but perhaps a case of having gone too far too quickly.
• BTP spreads came off the lows but still tighter on the session as Draghi gov't formation talks continue in Italy.
• BoE's Bailey and ECB's Lagarde spoke in the afternoon but added little new.
• Slow in supply today, but Tuesday sees German linker auction, Netherland Jul-31 DSL via DDA, and Spain new 50-Yr syndication.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is unchanged at -0.711%, 5-Yr is up 0.2bps at -0.686%, 10-Yr is up 0.3bps at -0.445%, and 30-Yr is up 0.5bps at 0.019%.
• UK: The 2-Yr yield is down 0.8bps at -0.033%, 5-Yr is down 0.3bps at 0.081%, 10-Yr is down 0.7bps at 0.475%, and 30-Yr is down 1.4bps at 1.058%.
• Italian BTP spread down 2.9bps at 95.3bps/Spanish spread unchanged at 57.2bps