EGBs-GILTS CASH CLOSE: BTPs Outperform

The UK and German curves flattened modestly to start the week, with the short end/belly continuing to weaken on firming central bank hike expectations.

• In early morning trade, Gilt and Bund futures ticked to their weakest levels since early January, but recovered over the course of the session to close nearly unchanged.
• Italian spreads saw their tightest close to Bunds since Feb 2 (ECB meeting), testing 180bp again as equities strengthened throughout a risk-on session.
• Gilts edged higher in the afternoon after the BoE's long-dated Gilt APF sale, which saw unremarkable 1.33x cover but somewhat of a relief compared with last week's short-dated sale which didn't see the full target amount sold.
• Tuesday sees UK jobs data and the prelim Eurozone Q4 GDP release, with the US inflation report the main event.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.1bps at 2.782%, 5-Yr is up 2.3bps at 2.423%, 10-Yr is up 0.4bps at 2.368%, and 30-Yr is down 0.1bps at 2.322%.
• UK: The 2-Yr yield is up 1.1bps at 3.639%, 5-Yr is up 1.3bps at 3.349%, 10-Yr is up 0.6bps at 3.402%, and 30-Yr is up 0.1bps at 3.814%.
• Italian BTP spread down 4.2bps at 180.3bps / Spanish down 1.1bps at 93.8bps