EGBs-GILTS CASH CLOSE: BTPs Outperform As Vujcic Opines On 50bp Cuts

Periphery spreads tightened for a 4rd consecutive session Thursday, with core EGBs/Gilts trading mixed as US inflation developments weighed.

• Global yields jumped led by Treasuries after US December inflation readings came in slightly higher than expected.
• But subsequent to US CPI, an MNI event with Croatia's/ECB's Vujcic saw a dovish turn in market pricing when he said that half-point rate cuts should not be ruled out if justified by incoming data.
• On the day, the German curve twist steepened marginally, with the short end benefiting from a pullback in ECB hike pricing expectations cued by the Vujcic comments. The UK curve leaned bear steeper.
• Periphery spreads maintained their narrowing made at the open, after a brief tick higher on US CPI. BTP/Bund closed below 160bp, at the same level as the Dec 22 close (157.1bp).
• ECB's Lagarde speaks after the cash close; Friday's early highlight is UK GDP/activity data.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.3bps at 2.626%, 5-Yr is down 1.7bps at 2.153%, 10-Yr is down 1.0bps at 2.236%, and 30-Yr is up 0.8bps at 2.426%.
• UK: The 2-Yr yield is up 2bps at 4.255%, 5-Yr is up 0.2bps at 3.757%, 10-Yr is up 2.3bps at 3.842%, and 30-Yr is up 2.5bps at 4.44%.
• Italian BTP spread down 2.6bps at 157.1bps / Spanish down 2.1bps at 91.8bps