EGBs-GILTS CASH CLOSE: Bunds Underperform Despite ECB Cut Pushback

EGBs and Gilts closed flat-to-weaker Monday, with Bunds modestly underperforming, as nascent gains early in the session reversed in the afternoon.

• Shrugging off ECB policymakers' pushback against 2024 rate cuts (including Vasle and Kazimir), Bunds gained in morning European trade, helped by German IFO missing to the downside.
• This was the first session in the past 6 that 10Y Bund yields have risen, stalling just above the 2% mark. The German curve bear steepened modestly.
• The UK's bear flattened, having flipped from bull flattening earlier in the session (in line with Friday's surprise BoE APF sales plans). BoE Broadbent's speech didn't really move market pricing.
• Periphery spreads tightened, as the less-onerous-than-expected ECB PEPP tapering/wind-down plan announced last Thursday continued to be digested.
• Tuesday's key release is final Euro inflation data, which will provide more clues as to underlying dynamics; we also get appeareances by ECB's Simkus, Kazimir, Vijcic, and BoE's Breeden.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.9bps at 2.553%, 5-Yr is up 5.3bps at 2.052%, 10-Yr is up 6.3bps at 2.079%, and 30-Yr is up 6.4bps at 2.279%.
• UK: The 2-Yr yield is up 3bps at 4.32%, 5-Yr is up 1.3bps at 3.749%, 10-Yr is up 0.8bps at 3.695%, and 30-Yr is up 1.7bps at 4.177%.
• Italian BTP spread down 2.2bps at 168.5bps / Greek down 2.9bps at 113.1bps