EGBs-GILTS CASH CLOSE: BTPs Soar As ECB Set To Pick Up The Pace

The ECB announced Thursday that it would significantly increase the pace of purchases under its PEPP programme from tomorrow. EGBs rallied, but the final impact was mixed.

• 10-Yr Bund yields dropped 4.4bps following the decision statement, but the fall was pared to just 1.8bps by the end of Lagarde's press conference. Conversely, BTP spreads led the periphery rally, falling sharply and continuing to compress over the rest of the session.
• Reuters sources story post-ECB said the PEPP monthly buying target "well above" E60bn, but <E100bn (implying between E15-25bn of weekly buys): ECB's been buying avg ~E14bn a week so far in 2021.
• Earlier in the session, Italy and Ireland sold E1.5bn and E8bn in bonds, respectively.
• Gilt yields ended the day higher. Attention first thing Friday will be on UK GDP figures.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is down 0.9bps at -0.691%, 5-Yr is down 1.6bps at -0.632%, 10-Yr is down 2.1bps at -0.334%, and 30-Yr is down 0.3bps at 0.181%.
• UK: The 2-Yr yield is up 1.4bps at 0.08%, 5-Yr is up 0.8bps at 0.327%, 10-Yr is up 2.1bps at 0.735%, and 30-Yr is up 3.1bps at 1.26%.
• Italian BTP spread down 5.3bps at 93.5bps / Spanish spread down 3.5bps at 63bps