EGBs-GILTS CASH CLOSE:  BTPs Lead Recovery

Core European bonds recovered early losses Thursday as yields turned largely flat on the session in the afternoon. Limited data/newsflow, with some anticipation of Friday's flash May PMI readings.

• The risk-on tone (as equities continued to rebound from Wednesday's mini-rout) saw BTP spreads compress sharply, outperforming peers.
• A few central bank speakers today, but the main comments were by ECB's Lane who said the eurozone economy was still "in a hole", and stressed both that short-term data would be "noisy" and that a sustained recovery should be assumed.
• With no supply, PMIs are the highlight of Friday's calendar; we get ECB's Lagarde speaking following the Eurogroup meeting as well.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is up 0.2bps at -0.645%, 5-Yr is up 0.6bps at -0.5%, 10-Yr is up 0.1bps at -0.109%, and 30-Yr is down 1bps at 0.437%.
• UK: The 2-Yr yield is down 2.6bps at 0.049%, 5-Yr is down 1.3bps at 0.361%, 10-Yr is down 0.9bps at 0.839%, and 30-Yr is down 0.7bps at 1.391%.
• Italian BTP spread down 6.1bps at 116.7bps/Spanish spread down 3.7bps at 68.1bps