EGBs-GILTS CASH CLOSE: Drop In Yields Reverses Course

After dropping Monday morning on risk-off headlines and a sharp move lower in equities, Bund and Gilt yields bounced back in the afternoon.

• The risk-off tone was set overnight with sharp weakness in Asian stocks on resurgent Omicron concerns and news that US Pres Biden's expansive fiscal plans had been derailed.
• The flattening curve moves on the open later reversed as European equities came off lows, though Germany's moved decisively steeper by the cash close and the UK's remained flatter. Volumes were notably weak.
• Several headlines of note though none moved the market: Germany's Nagel nominated to head Bundesbank; UK not (yet) introducing tougher measures to combat Omicron; Italy released 2022 funding plans.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1bps at -0.73%, 5-Yr is down 0.6bps at -0.613%, 10-Yr is up 1.1bps at -0.367%, and 30-Yr is up 2.9bps at -0.008%.
• UK: The 2-Yr yield is up 3.3bps at 0.542%, 5-Yr is up 2.6bps at 0.64%, 10-Yr is up 1.3bps at 0.772%, and 30-Yr is up 2bps at 0.952%.
• Italian BTP spread up 2.3bps at 129.6bps / Portugal down 0.1bps at 63.3bps