EGBs-GILTS CASH CLOSE: Curves Flatter To End The Week

UK and German yields reversed higher in late Friday trade in a flattening move. Periphery spreads closed slightly wider.

• Limited data flow in the morning was largely brushed aside (including a soft German IFO), with some attention on various ECB sources articles - MNI's ("ECH Mulls September Hawkish Pause, August CPI Key") pointed to the Sept 15 rate decision remaining in the balance.
• The main focus was Fed Chair Powell's Jackson Hole speech. It was hawkish but no moreso than the central bank's existing tightening bias would suggest, and the immediate reaction was a drop in yields. This reversed soon thereafter though, led by Treasuries which began to price in a slightly more hawkish Fed path.
• The UK curve twist flattened, with Germany's bear flattening.
• Attention turns to ECB's Lagarde who speaks at Jackson Hole after the market close (2100CET). Next week's focus will be Eurozone CPIs which will help shape the hold vs hike debate at the September ECB meeting.
• BoE's Broadbent will participate in a Jackson Hole panel Saturday on the topic of "Globalization at an Inflection Point." UK markets will be closed on Monday for a holiday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 7.7bps at 3.035%, 5-Yr is up 7.5bps at 2.587%, 10-Yr is up 4.8bps at 2.561%, and 30-Yr is up 4.4bps at 2.662%.
• UK: The 2-Yr yield is up 4.9bps at 5.022%, 5-Yr is up 4.2bps at 4.516%, 10-Yr is up 1.5bps at 4.441%, and 30-Yr is down 0.8bps at 4.639%.
• Italian BTP spread up 2bps at 168bps / Spanish up 0.2bps at 102.9bps