EGBs-GILTS CASH CLOSE: Bull Flattening Move Fades Post-ECB Data

Core FI curves finished Tuesday's session flatter, but yields failed to hold intraday lows. Periphery spreads saw steady compression.

• Bunds began weakening from session's best levels just after 1400GMT. This was (perhaps not coincidentally) after data showed fairly limited ECB asset redemptions last week, meaning that the flat weekly net purchases revealed yesterday were largely a consequence of the bank failing to ramp up bond purchases as many had expected it would.
• On that note, the question of the ECB's reaction function amid rising yields is the theme of our Governing Council decision preview published today (click here for PDF).
• Supply came from the UK (Gilts, GBP2.25bn), the Netherlands (DSL, EUR2.330bn), and the EU SURE syndication (E9bn).

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is down 0.1bps at -0.681%, 5-Yr is down 1.5bps at -0.609%, 10-Yr is down 2.4bps at -0.301%, and 30-Yr is down 2bps at 0.205%.
• UK: The 2-Yr yield is down 1.4bps at 0.084%, 5-Yr is down 2.5bps at 0.333%, 10-Yr is down 2.7bps at 0.727%, and 30-Yr is down 4.3bps at 1.242%.
• Italian BTP spread down 4bps at 99.3bps / Spanish spread down 1.2bps at 66.4bps