EGBs-GILTS CASH CLOSE: Curve Bellies Rally On Soft US Jobs Data, Oil Drop

European yields pulled back Thursday, resuming the strong rally begun after the soft US CPI data Tuesday.

• Following a constructive morning session, which partly retraced Wednesday's weakness, Bunds and Gilts gained sharply in the afternoon on yet more market-friendly US data (higher-than-expected jobless claims). A further drop in oil prices helped the cause.
• While yields retraced higher from session lows by the cash close, both the German and UK curves leaning bull flatter as ECB/BoE cut pricing deepened, with curve bellies outperforming in both cases.
• ECB speakers had little impact, while BOE's Ramsden and Greene warned of the need for restrictive policy for an extended period but markets shrugged it off.
• Periphery spreads tightened, with 10Y BTPs/Bunds touching a fresh post-September low, eyeing the 170bp mark.
• That's ahead of Friday's Italy sovereign ratings review by Moody's, which closes out the week - also Friday we get UK retail sales, final October Eurozone inflation data, and another raft of ECB/BOE speakers (from Lagarde to Ramsden/Greene again).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 5.9bps at 2.951%, 5-Yr is down 6.6bps at 2.519%, 10-Yr is down 5.4bps at 2.59%, and 30-Yr is down 4.4bps at 2.829%.
• UK: The 2-Yr yield is down 7.8bps at 4.544%, 5-Yr is down 8.3bps at 4.15%, 10-Yr is down 7.6bps at 4.151%, and 30-Yr is down 6.3bps at 4.588%.
• Italian BTP spread down 3.4bps at 176.4bps / Spanish down 2.6bps at 100.1bps