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EGBs-GILTS CASH CLOSE: BoE Steals The Show

BONDS

Gilts underperformed Bunds Thursday, with Greece outperforming among periphery EGBs, amid one of the busiest 24 hours in recent memory for central bank decisions.

  • After the Fed took a hawkish turn Weds evening, the BoE surprised many today by hiking Bank rate 15bp; this was followed by the ECB's announcement it was ending net PEPP purchases in March 2022 but will reinvest until at least Oct 2024 and keep APP purchases (beginning Q2 2022) open-ended.
  • The UK curve flattened sharply with the short end selling off, though this reversed, with yields ending the day higher in parallel. The German curve steepened all day. GGBs easily outperformed, with the ECB announcing that they could be the beneficiary of flexible PEPP reinvestment policy.
  • Weak PMI data and Omicron headlines were largely shrugged off.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is down 1bps at -0.69%, 5-Yr is unchanged at -0.583%, 10-Yr is up 1.2bps at -0.348%, and 30-Yr is up 4.1bps at -0.005%.
  • UK: The 2-Yr yield is up 1.9bps at 0.508%, 5-Yr is up 2.1bps at 0.61%, 10-Yr is up 2.1bps at 0.757%, and 30-Yr is up 1.5bps at 0.918%.
  • Italian BTP spread up 4.3bps at 132.2bps / Greek down 3bps at 156.3bps

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