EGBs-GILTS CASH CLOSE: Bunds Fail To Hold Onto Initial ECB Rally

European core FI curves ended the week steeper, notably Bunds which failed to hold onto Thursday's post-ECB decision rally.

• Friday's weakness was largely a result of some push-back among ECB policymakers in the 24 hours since the decision (pointing out that they are merely accelerating and not increasing the total volume of PEPP), and a sell-off in US Tsys.
• Periphery spreads finished mixed, with Italy a little tighter despite news of broader lockdowns and wider fiscal deficits coming.
• Gilts underperfomed. Earlier, Jan UK GDP was contractionary but less so than expected.
• The Europe focus next week is on the Bank of England meeting, which comes a day after the global focal point of the Federal Reserve decision.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is up 0.4bps at -0.687%, 5-Yr is up 1.3bps at -0.619%, 10-Yr is up 2.8bps at -0.306%, and 30-Yr is up 4bps at 0.221%.
• UK: The 2-Yr yield is up 1.9bps at 0.099%, 5-Yr is up 5.4bps at 0.381%, 10-Yr is up 8.7bps at 0.822%, and 30-Yr is up 9.2bps at 1.352%.
• Italian BTP spread down 0.6bps at 92.9bps/ Spanish up 0.5bps at 63.5bps