EGBs-GILTS CASH CLOSE: BTPs Gain Ground On German Court Ruling

Core FI gained a bit of ground Thursday, with BTPs outperforming on the periphery. The Bund and Gilt curves saw very modest steepening, in Germany's case off the bull variety.

• Highlight of the session was the German federal court ruling paving the way for Germany to ratify the EU recovery fund; with that (modest) uncertainty out of the way, BTP spreads compressed.
• Germany allotted E3.42bn of 10-yr Bund; UK GBP2.50bn of Jul-35 Gilt.
• Otherwise, with little in the way of impactful speakers/data during the session (UK Mar inflation was broadly in line with expectations), attention was more on ECB tomorrow.
• MNI ran an exclusive this afternoon citing sources saying there are deep differences on the Governing Council over the strength of the eurozone recovery and thus the future of stimulus.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is down 0.3bps at -0.696%, 5-Yr is down 0.2bps at -0.607%, 10-Yr is unchanged at -0.262%, and 30-Yr is unchanged at 0.281%.
• UK: The 2-Yr yield is unchanged at 0.038%, 5-Yr is up 0.2bps at 0.316%, 10-Yr is up 0.9bps at 0.74%, and 30-Yr is up 2bps at 1.285%.
• Italian BTP spread down 2.6bps at 101.5bps / Spanish down 1.2bps at 65.4bps