EGBs-GILTS CASH CLOSE: BTPs Reverse

The UK and German curves flattened Tuesday with modest UK outperformance, while periphery spreads widened across the board.

• BTPs underperformed, reversing Tuesday's gains.
• Portugal 10Y spreads also widened amid risks of early elections should the 2022 budget be voted down Wednesday, but the short end rallied on the IGCP announcing a bond exchange tomorrow.
• Little data out today; Spanish factory gate inflation came in at the highest since 1977, while last week, the ECB made the most net asset purchases since mid-July.
• Focus remains on the ECB meeting Thursday (our preview went out Monday), and the BoE next week. UK Budget also of note Wednesday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.6bps at -0.658%, 5-Yr is up 1.1bps at -0.441%, 10-Yr is down 0.3bps at -0.117%, and 30-Yr is down 2.5bps at 0.244%.
• UK: The 2-Yr yield is down 2.1bps at 0.626%, 5-Yr is down 2bps at 0.8%, 10-Yr is down 3bps at 1.11%, and 30-Yr is down 4.2bps at 1.316%.
• Italian BTP spread up 3.4bps at 111.3bps / Portuguese up 2.9bps at 53.3bps