EGBs-GILTS CASH CLOSE: ECB Day Resolves In Dovish Direction

Markets ultimately took the ECB decision and press conference as dovish, though price action was very much two-way for most of the European afternoon Thursday.

• After an initial knee-jerk move lower on the ECB statement (a move whose cause was not totally clear, perhaps the newly-communicated statement not as dovish as some hoped), Bund yields moved quickly to session lows - only to retrace to where they began the afternoon. Periphery spreads ended marginally lower.
• With minimal data and no supply, the only highlight apart from the ECB was a speech by BoE's Broadbent but that didn't provide major revelations - this may have taken a bit of impetus out of the potential for action at the August MPC meeting though - Gilts outperformed.
• UK retail sales and flash PMIs highlight Friday's calendar.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.5bps at -0.72%, 5-Yr is down 2bps at -0.702%, 10-Yr is down 2.9bps at -0.424%, and 30-Yr is down 3bps at 0.058%.
• UK: The 2-Yr yield is down 3.2bps at 0.07%, 5-Yr is down 3.4bps at 0.267%, 10-Yr is down 3.6bps at 0.567%, and 30-Yr is down 5.3bps at 1.003%.
• Italian BTP spread down 1.7bps at 106.6bps