EGBs-GILTS CASH CLOSE: Dovish Tone Set By UK CPI Sustained In Afternoon

Bunds and Gilts has a solid session Wednesday. Weaker-than-expected UK July CPI set a bullish tone early for core FI, and with very few headline drivers, morning gains were sustained in the afternoon.

• Periphery spreads mostly compressed, led by Italy; Greece's widened slightly vs Bunds.
• UK CPI was 0.2pp lower than expected in July. Eurozone final CPI was in line with flash.
• Germany held a strong 30-Yr Bund auction (E1bln in supply).
• After hours, the minutes from the July Fed monetary policy meeting will be in focus.
• Thursday's highlights include France selling up to E7bln of MT OATs and E1bln of linkers (Spain's auction has been cancelled), with the Norges Bank decision getting attention as well.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.8bps at -0.744%, 5-Yr is down 0.9bps at -0.738%, 10-Yr is down 1.1bps at -0.482%, and 30-Yr is down 1.3bps at -0.034%.
• UK: The 2-Yr yield is down 0.8bps at 0.141%, 5-Yr is down 0.7bps at 0.292%, 10-Yr is up 0.3bps at 0.565%, and 30-Yr is up 1.8bps at 0.961%.
• Italian BTP spread down 1.1bps at 103.3bps / Spanish unch at 70bps