EGBs-GILTS CASH CLOSE: Bull Flatter As Eurozone Disinflation Confirmed

Gilts outperformed Bunds Thursday, with curves leaning bull flatter.

• 10Y Gilt yields closed at the lowest since May 23rd; Bunds since the 12th as further data pointed to potential central bank restraint amid softer price pressures.
• Eurozone flash CPI reflected the deceleration seen in most national prints this week, with core pulling back; EGBs and Gilts extended their gains in the afternoon as US labour cost data was revised sharply downward.
• We saw an uptick in inflation expectations in the latest BoE DMP survey, but it did not heavily influence Gilts.
• BoE and ECB terminal hike pricing was flat on the day, though had fallen a few bp intraday at one point before recovering higher.
• Friday sees French industrial production data and an appearance by ECB's Vasle, but most attention will be on the US nonfarm payrolls report.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.1bps at 2.718%, 5-Yr is down 3.3bps at 2.245%, 10-Yr is down 3.3bps at 2.249%, and 30-Yr is down 0.5bps at 2.456%.
• UK: The 2-Yr yield is down 4.4bps at 4.291%, 5-Yr is down 5.1bps at 4.05%, 10-Yr is down 6.7bps at 4.116%, and 30-Yr is down 5.6bps at 4.459%.
• Italian BTP spread up 4bps at 183.9bps / Spanish down 1.4bps at 103.6bps