EGBs-GILTS CASH CLOSE: Dovish Tone Continues

Bunds and Gilts continued to bull flatten Wednesday, largely holding onto gains made in the morning (with further ECB-speak indicating a dovish stance on PEPP, today from Panetta). Periphery spreads basically unchanged.

• In supply, Germany held a very weak (technically uncovered, 0.73x bid-to-cover) 15-Yr Bund auction, allotting E1.73bln; Italy sold E4.75bln of BTPei and short-term BTP.
• Not much in data, though French May confidence indices beat expectations.
• Ex-Gov't aide Cummings' testimony in Parliament on the govt's handling of the pandemic made for dramatic headlines, but little market impact.
• Thursday sees several speakers (ECB's de Guindos/Schnabel/Weidmann, BOE's Vlieghe) and Italian and German confidence data but no bond issuance.

Closing yields/10-Yr Spreads to Bunds:

• Germany: The 2-Yr yield is down 0.3bps at -0.666%, 5-Yr is down 2.4bps at -0.577%, 10-Yr is down 3.9bps at -0.206%, and 30-Yr is down 4.7bps at 0.349%.
• UK: The 2-Yr yield is up 0.7bps at 0.023%, 5-Yr is down 1.9bps at 0.302%, 10-Yr is down 3.4bps at 0.752%, and 30-Yr is down 3.8bps at 1.282%.
• Italian BTP spread up 0.1bps at 112.7bps / Spanish spread down 0.2bps at 65.8bps