EGBs-GILTS CASH CLOSE: Flatter  Curves Ahead Of Fed And ECB

Bunds underperformed Gilts Wednesday ahead of the US Federal Reserve decision after the cash close, and before the ECB Thursday.

• Amid a second consecutive day of limited trading volumes, and equally scarce news/macro catalysts, the German curve leaned bear flatter, with the belly underperforming (Bobl yields +7bp).
• The 7Y German auction saw a weak reception today.
• The UK belly likewise underperformed in a twist flattening curve movement, with 2Y yields up nearly 7bp, reflecting a bounceback in BoE terminal rate expectations on the day, perhaps with an eye on next week's MPC.
• Amid the Bund selloff, periphery spreads closed a little tighter, led by Greece.
• MNI Europe Pi saw longs set in Gilt and BTP over the past week.
• While there is a decent slate of European data early Thursday (including German and Italian confidence surveys), all attention will be around the ECB's messaging attached to the expected 25bp hike (MNI's preview is here).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.3bps at 3.131%, 5-Yr is up 7.3bps at 2.584%, 10-Yr is up 6bps at 2.485%, and 30-Yr is up 5.5bps at 2.519%.
• UK: The 2-Yr yield is up 6.5bps at 5.031%, 5-Yr is up 7.4bps at 4.435%, 10-Yr is up 1.3bps at 4.281%, and 30-Yr is down 1.9bps at 4.409%.
• Italian BTP spread down 1.8bps at 161.7bps / Greek down 4.1bps at 128.5bps