EGBs-GILTS CASH CLOSE: Bund Yields Close At 5+ Month Lows

Bund yields (5Y through 30Y) closed at the lowest levels since February, with Gilts also strengthening and bull flattening Tuesday.

• Core FI strength accelerated into the cash close, as equities re-tested the session's weakest levels. The theme throughout the day was China's regulatory crackdown hitting local stocks, with spillovers into US and European markets. Periphery spreads widened.
• Comparatively little on the data front Tuesday. In supply, the UK sold GBP3bln of Gilt, while Italy sold E3.75bln of BTP short-term.
• On Wednesday, Germany sells E2.5bln of Bund, while we get some confidence data (German GfK, French consumer confidence, Italian manufacturing/consumer confidence). No central bank speakers scheduled, but the Federal Reserve meeting will be in focus.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.3bps at -0.746%, 5-Yr is down 1.9bps at -0.722%, 10-Yr is down 2.3bps at -0.441%, and 30-Yr is down 2.7bps at 0.037%.
• UK: The 2-Yr yield is down 0.4bps at 0.076%, 5-Yr is down 0.7bps at 0.271%, 10-Yr is down 1.3bps at 0.558%, and 30-Yr is down 1.9bps at 0.972%.
• Italian BTP spread up 1.7bps at 106.4bps/ Spanish up 1.5bps at 71.3bps