EGBs-GILTS CASH CLOSE: BTPs Outperform After Low TLTRO Repayments

Bunds outperformed Gilts Friday with continued flattening in both curves, as ECB TLTRO repayments turned out lower than expected (around E300bln vs E600bln expected), one implication of which was that German bond collateral will remain a scarce commodity.

• Both German and UK yields recovered from session highs by early afternoon.
• Gilts continued to weaken post-Thursday's budget announcement - we discuss the issuance implications of the Autumn Statement here.
• A strong session for stocks and the TLTRO results (which meant Italian paper wasn't about to flood the market) helped BTP spreads tighten further (though
• ECB rate hike pricing dived a few basis points in the wake of the TLTRO results, but bounced back quickly and finished steady on the day. Hawkish comments from ECB's Nagel and Knot helped keep a floor on rates.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.8bps at 2.106%, 5-Yr is down 0.5bps at 1.986%, 10-Yr is down 0.6bps at 2.014%, and 30-Yr is up 0.1bps at 1.929%.
• UK: The 2-Yr yield is up 6.3bps at 3.179%, 5-Yr is up 4bps at 3.295%, 10-Yr is up 3.7bps at 3.239%, and 30-Yr is up 3.5bps at 3.388%.
• Italian BTP spread down 3.3bps at 188.4bps/ Greek down 0.9bps at 225.3bps