EGBs-GILTS CASH CLOSE: Bull Steeper Between Central Bank Flashpoints

Core EGBs and Gilts strengthened Tuesday with curves leaning bull steeper.

• The first major risk event of a busy week had little impact on European instruments, with the Bank of Japan's decision to end negative interest rate and yield curve control policy well-anticipated.
• With little news flow or data (German ZEW beat expectations but not a market-mover), supply was a key theme.
• Gilts ticked higher on a solid Oct-43 auction, helping UK instruments outperform global counterparts. Syndications of 10Y BTPei (E5bln) and Feb-50 EU Green (E7bln) saw sizes at the high end of expectations.
• Periphery EGB spreads widened on the day, with GGBs weakest.
• Wednesday's agenda begins with UK inflation (MNI preview here) ahead of Thursday's BoE decision; we also get ECB commentary from Lagarde, Lane and Schnabel, and after the cash close, the Fed decision and assorted communications.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 3.3bps at 2.919%, 5-Yr is down 2.4bps at 2.453%, 10-Yr is down 0.9bps at 2.45%, and 30-Yr is up 1.1bps at 2.611%.
• UK: The 2-Yr yield is down 4.3bps at 4.26%, 5-Yr is down 4.5bps at 3.954%, 10-Yr is down 3.2bps at 4.057%, and 30-Yr is down 0.5bps at 4.513%.
• Italian BTP spread up 3.2bps at 125.4bps / Spanish bond spread up 1.5bps at 80bps