EGBs-GILTS CASH CLOSE: Dovish Tone

German comments that a delay in the dispersal of EU recovery funds is 'increasingly likely' pushed Italian spreads wider toward the end of the cash session, with Bunds yields nearing lows amid bull flattening.

Earlier, we saw a temporary uptick in Gilt yields on a BBG report that the UK had provided the EU with new legal texts to help push forward the FTA talks, but the move faded quickly. BoE's Bailey provided little new on negative rates in his comments. Weak German flash CPI data helped underline the session's dovish tone. Closing levels:

• Germany: The 2-Yr yield is down 0.6bps at -0.71%, 5-Yr is down 1bps at -0.725%, 10-Yr is down 1.7bps at -0.545%, and 30-Yr is down 2.6bps at -0.12%.
• UK: The 2-Yr yield is up 0.2bps at -0.053%, 5-Yr is down 0.3bps at -0.085%, 10-Yr is down 1.8bps at 0.184%, and 30-Yr is down 2.3bps at 0.72%.

10-Yr Periphery EGB Spreads:

• Italian BTP spread down 1bps at 139.7bps
• Spanish bond spread down 0.4bps at 77bps
• Portuguese PGB spread down 0.6bps at 78.3bps
• Greek bond spread down 0.3bps at 156.3bps