EGBs-GILTS CASH CLOSE: ECB Hikes 75bp, But Intrigue Lies Elsewhere

The ECB delivered a record 75bp hike today, but with that priced in beforehand, most reaction came on the non-rate intrigue.

• German Schatz yields rose sharply as the ECB surprised by removing the 0% interest rate ceiling for remuneration of government deposits. That move was seen as easing recent bond collateral shortage fears, especially at the short end.
• The usual round of post-meeting sources stories began with a BBG piece right on the cash close that saw BTPs fall sharply: ECB officials "don't exclude" another 75bp raise in October, with "QT expected to be discussed" at the Oct meeting and beyond.
• BTPs had been seen benefiting from the apparent lack of discussion of QT today, so futures sold off after the sources story.
• Overshadowed was the pullback in BoE pricing in the afternoon from session highs, as analysts dropped their inflation forecasts on gov't energy cost mitigation plans.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is up 22.9bps at 1.334%, 5-Yr is up 18.1bps at 1.555%, 10-Yr is up 14bps at 1.717%, and 30-Yr is up 9.8bps at 1.779%.
• UK: The 2-Yr yield is up 6.7bps at 3.068%, 5-Yr is up 9bps at 3.007%, 10-Yr is up 11.3bps at 3.147%, and 30-Yr is up 12.9bps at 3.498%.
• Italian BTP spread down 3.4bps at 225.7bps / Greek down 6.7bps at 251.2bps