EGBs-GILTS CASH CLOSE: ECB Hawks Continue To Move The Needle

European curves steepened Monday with Bunds underperforming Gilts.

• With a fairly thin data slate (EC consumer confidence was a little worse than expected but not a market mover), and Asian holidays muting overnight price action, ECB speakers took centre stage as the day proceeded.
• On the hawkish end of the commentary were Kazimir and Vujcic who continued to signal support for 50bp hikes, whereas Stournaras and Visco proposed a more measured approach.
• Pricing for cumulative further ECB hikes rose by nearly 4bp at one point to just under 147bp to Jul 2023, joint-highest since Jan 11.
• The German curve bear steepened, with the UK's bull steepening.
• ECB's Lagarde speaks after the cash close Monday. Attention swiftly turns to flash PMI data on Tuesday morning.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.1bps at 2.598%, 5-Yr is up 3.1bps at 2.241%, 10-Yr is up 2.9bps at 2.206%, and 30-Yr is up 3.2bps at 2.173%.
• UK: The 2-Yr yield is down 2.5bps at 3.465%, 5-Yr is down 2.7bps at 3.269%, 10-Yr is down 1.8bps at 3.36%, and 30-Yr is down 0.9bps at 3.712%.
• Italian BTP spread up 0.7bps at 182.3bps / Spanish up 1bps at 96.8bps