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EGBs-GILTS CASH CLOSE: Dovish BoE Spurs UK Steepening

BONDS

A dovish Bank of England meeting spurred a strong steepening in the UK yield curve as short-end yields fell sharply Thursday.

  • But long-end yields underperformed in both the UK and Germany, defying a stock-selloff. One factor seen was ECB's Rehn saying the bank should hike rates in July and continue to raise gradually after that.
  • With equities reversing sharply in the afternoon, peripheral spreads mostly widened: BTP 10Y / Bund closed just shy of 200bp for the 2nd straight day.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 1.4bps at 0.285%, 5-Yr is up 5.1bps at 0.766%, 10-Yr is up 7.3bps at 1.044%, and 30-Yr is up 9.1bps at 1.171%.
  • UK: The 2-Yr yield is down 9.1bps at 1.547%, 5-Yr is down 5.7bps at 1.67%, 10-Yr is down 0.2bps at 1.964%, and 30-Yr is up 4.7bps at 2.125%.
  • Italian BTP spread up 0.9bps at 199.5bps / Greek down 3.7bps at 240.8bps

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