EGBs-GILTS CASH CLOSE: BoE Operation Spurs Long-End Rally

Gilt yields came down sharply from session highs to outperform Bunds across the curve by Wednesday's close - both the UK and German curves twist steepened.

• There was attention on both ends of the UK yield curve Wednesday: the long-end as usual eyed after last night's comments from BoE Gov Bailey confirming the end of emergency bond buys this Friday,. An FT article cited sources that purchases would be extended (helping boost global FI), but the BoE later refuted (pushing yields to session highs).
• With yields from 20Y on above 5%, the BoE's long-dated purchase op sparked a strong rally after good takeup and zero rejected offers. 2Y yields fell for most of the session, with no obvious catalyst, apart from general risk-off (BoE hike pricing didn't move much).
• EGB trading was not as active but several points of interest, including ECB hawk Holzman pulling down cumulative hike pricing to end-2022 by 4bp to 132bp, saying a 100bp hike was unnecessary and 75bp in Oct and 50bp in Dec would bring policy close to neutral.
• Attention turns back to the US, with the Fed meeting minutes later Wednesday, and CPI data Thursday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is down 1.4bps at 1.827%, 5-Yr is down 0.7bps at 2.051%, 10-Yr is up 1.6bps at 2.314%, and 30-Yr is up 5.5bps at 2.356%.
• UK: The 2-Yr yield is down 27.4bps at 4.017%, 5-Yr is down 8.7bps at 4.473%, 10-Yr is down 0.7bps at 4.436%, and 30-Yr is up 1.9bps at 4.818%.
• Italian BTP spread up 4.2bps at 242.3bps / Greek up 3.3bps at 267.2bps