EGBs-GILTS CASH CLOSE: Dovish BoE Hold Boosts Gilts

Gilts outperformed global peers Thursday as the BoE decision was seen as a "dovish hold", but yields closed off session lows.

• European bonds started the session weakly, but rallied at midday London time led by Gilts after the minutes of the BoE meeting noted the decision to hold rates was "finely balanced" for some policymakers - putting the next meeting in August more firmly in focus for a cut (now better than 50/50 implied).
• Yields extended to session lows after soft US economic data in the early afternoon (including jobless claims and housing activity).
• But global core FI soon pulled back alongside Treasuries amid some apparent reconsideration of the underlying data (strong Philly Fed prices received), and EGB/Gilt yields closed near the middle of their daily trading ranges.
• The UK curve twist steepened on the day; Germany's bear steepened. Periphery EGB spreads tightened for their 3rd day in 4, following last week's sharp widening.
• Friday morning brings UK retail sales data, followed by June flash PMIs.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2bps at 2.828%, 5-Yr is up 2.7bps at 2.447%, 10-Yr is up 2.7bps at 2.431%, and 30-Yr is up 3.9bps at 2.594%.
• UK: The 2-Yr yield is down 3bps at 4.156%, 5-Yr is down 3bps at 3.904%, 10-Yr is down 1bps at 4.057%, and 30-Yr is up 1.4bps at 4.565%.
• Italian BTP spread down 2bps at 151.7bps / Spanish down 2.5bps at 86.6bps