EGBs-GILTS CASH CLOSE: Bunds Return From Holiday On Front Foot

Gilts yields more than retraced the prior session's rise, while core EGBs strengthened in their return from Wednesday's May Day holiday.

• A more dovish-than-expected Federal Reserve decision late Wednesday spilled over into a constructive start across the European FI space.
• Bunds continued to gain on a weak Italian Manufacturing PMI reading, but the move retraced after upward revisions to final Eurozone PMIs elsewhere. Largely solid US data didn't really move the needle, with most attention on Friday's US employment report.
• Periphery EGB spreads narrowed earlier in the session as equities gained, but reversed to close relatively flat after stocks retreated late.
• The UK and German curves leaned bull steeper.
• ECB's Lane speaks after the cash close. Aside from the US payrolls report which is the key highlight, Friday's schedule includes the Norges Bank decision, French industrial production, Eurozone unemployment, and final UK services PMI.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.4bps at 2.99%, 5-Yr is down 4.5bps at 2.571%, 10-Yr is down 4.3bps at 2.541%, and 30-Yr is down 4.5bps at 2.645%.
• UK: The 2-Yr yield is down 8.5bps at 4.426%, 5-Yr is down 9.2bps at 4.173%, 10-Yr is down 8bps at 4.286%, and 30-Yr is down 5.4bps at 4.75%.
• Italian BTP spread down 1bps at 132.3bps / Spanish up 0.4bps at 77.4bps