EGBs-GILTS CASH CLOSE: BTP Relief

Core European FI retraced most Friday's gains on Monday, with the German and UK curves bear steepening amid a broader risk-on move.

• Yields gained alongside a softer US dollar and stronger equities / commodity prices, with volumes light and no important data.
• Buffered by speculation that Italy PM Draghi's resignation could be averted this week, BTPs pared recent losses, with spreads vs Germany falling for the first session in 7.
• The key central bank commentary (with the ECB and Fed in blackout) came from BoE's Saunders, who said 2+% rates were not implausible.
• Attention turns to the next round of the UK Tory leadership contest after hours, and of course the ECB later this week.

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

• Germany: The 2-Yr yield is up 5.8bps at 0.525%, 5-Yr is up 7.8bps at 0.91%, 10-Yr is up 8.3bps at 1.216%, and 30-Yr is up 8.3bps at 1.443%.
• UK: The 2-Yr yield is up 6.2bps at 1.986%, 5-Yr is up 6.5bps at 1.87%, 10-Yr is up 6.8bps at 2.159%, and 30-Yr is up 5.1bps at 2.636%.
• Italian BTP spread down 7.5bps at 206.8bps / Spanish up 7.1bps at 122.9bps