EGBs-GILTS CASH CLOSE: Bund Yields Near 3% As Core FI Rout Continues

European yields rose sharply again Thursday as the core FI rout continued, amid heavy futures trading volumes.

• Bunds and Gilts sold off relentlessly through almost the entire session, shrugging off marginally softer-than-expected German/Spanish inflation prints, only finding a footing about an hour before the cash close.
• The German and UK curves ended bear steeper. Though yields finished off the highs, we still saw multiple multi-year highs set. 10Y Bund notably came within 1.7bp of the 3.00% mark but finished at a post-2011 high of 2.93%.
• 10Y Gilt yields meanwhile had risen over 20bp at one point before settling "just" 12bp higher.
• Once again it was difficult to pinpoint a trigger for the violent selloff, which could best be pinned on "higher-for-longer" bearish price action.
• 10Y BTP spreads widened to 200bp for the first time since 1Q, but ended up lower on the day as risk assets rallied after the US cash equity open.
• Friday's main focus is Eurozone inflation, which after today's prints looks likely to come in below expectations coming into the week. We also get UK GDP, German jobs data, and appearances by ECB's Lagarde, Vasle, Vujcic, Kazaks, and Visco.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.2bps at 3.286%, 5-Yr is up 7.8bps at 2.89%, 10-Yr is up 8.7bps at 2.93%, and 30-Yr is up 5.6bps at 3.089%.
• UK: The 2-Yr yield is up 6.5bps at 4.939%, 5-Yr is up 11.1bps at 4.583%, 10-Yr is up 12.6bps at 4.484%, and 30-Yr is up 11bps at 4.903%.
• Italian BTP spread down 0.8bps at 193.8bps / Spanish down 0.7bps at 109.2bps