EGBs-GILTS CASH CLOSE: Bearish Movement Ahead Of CPI

Bunds and Gilts weakened Thursday with modest bear steepening in the curves, as US data renewed concerns about price pressures going into Friday's inflation data.

• Thursday's stronger-than-expected US Core PCE prices reading for Q1 provided a hawkish clue for Friday's March PCE figure, which comes on the same day as several Euro area countries (incl France and Germany) post flash April CPI.
• After drifting in a slightly negative direction in morning trade, Bund and Gilt losses accelerated in the afternoon on the PCE data and as equities bounced from Wednesday's lows.
• Central bank hike expectations pared an early drop to finish flat in the case of the ECB, though BoE terminal pricing ticked up a few basis points.
• Data isn't the only risk Friday, with a closely-watched BoJ decision as well as potential month-end market dynamics.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.4bps at 2.826%, 5-Yr is up 6.2bps at 2.462%, 10-Yr is up 6.3bps at 2.46%, and 30-Yr is up 4.2bps at 2.534%.
• UK: The 2-Yr yield is up 6.8bps at 3.819%, 5-Yr is up 7.3bps at 3.665%, 10-Yr is up 6.5bps at 3.794%, and 30-Yr is up 7.1bps at 4.154%.
• Italian BTP spread up 1.8bps at 189.3bps / Spanish up 0.1bps at 104.9bps