EGBs-GILTS CASH CLOSE: Flatter As Hike Pricing Firms

Gilts underperformed Bunds as the UK government unveiled its budget plans Thursday, with both curves flattening.

• The UK autumn budget statement had relatively few surprises, though next year's expected Gilt remit exceeded consensus.
• ECB but particularly BoE hike pricing firmed (terminal rate up 10bp), fuelled by a US rate sell-off (Fed's Bullard contemplating rates as high as 7%).
• Curves bear flattened, with long-end yields weighed down by recession concerns (Brent fell below $90) and risk-off in equities.
• Periphery spreads narrowed from earlier wides; BTPs round-tripped from near 200bp to Bunds to close at 191.7bp, 2.3bp tighter on the session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.9bps at 2.124%, 5-Yr is up 3.6bps at 1.991%, 10-Yr is up 2.4bps at 2.02%, and 30-Yr is down 0.9bps at 1.928%.
• UK: The 2-Yr yield is up 12.3bps at 3.116%, 5-Yr is up 6.5bps at 3.255%, 10-Yr is up 5.3bps at 3.202%, and 30-Yr is up 4bps at 3.353%.
• Italian BTP spread down 2.3bps at 191.7bps /Greek up 0.7bps at 226.2bps