EGBs-GILTS CASH CLOSE: Bunds Lead Rally

Core European instruments rallied strongly Monday, as the Israel-Hamas conflict over the weekend helped boost safe havens.

• An early geopolitical-related bid in Bunds and Gilts faded over the course of the morning.
• While trading in cash Treasuries was closed for holidays, global yields dropped sharply in mid-afternoon on Dallas Fed Pres Logan's comment that higher market yields may mean less need for the Fed to raise rates.
• Just before those headlines crossed, EGBs benefited from a Reuters sources story pointing to little urgency at the ECB to curtail PEPP purchases ahead of schedule.
• Peripheries benefited from the latter in particular, with 10Y BTP yields falling 10+bp in the last 3 hours of European cash trade, but still finished wider of Bunds on the day.
• Bunds and Gilts leaned bull flatter, with some modest outperformance in the curve bellies, German yields down in double-digits across the curve.
• Looking ahead, Tuesday brings another quiet session for European data. BOE's Mann speaks later this evening, with Tuesday morning bringing the minutes of the BOE's financial policy meeting.