EGBs-GILTS CASH CLOSE: Further Gains Going Into Month/Quarter-End

Bunds and Gilts rallied again Wednesday, with gains extending toward the close.

• With an eye on month/quarter-end Thursday (markets are closed Friday), rebalancing dynamics were seen as positive for global core bonds.
• A positive tone was set early in the session with modestly below-consensus inflation data from Spain, which was the first glimpse of the flash March round that ends next Wednesday.
• While futures volumes were relatively limited for most of the session, strength was evident across both the German and UK curves, with bellies outperforming.
• Periphery EGB spreads widened slightly, though no particular catalyst was evident.
• Eurozone data Thursday includes flash Portuguese and Belgian inflation, with German labour market indicators and retail sales also of interest - and appearances by ECB's Panetta and Villeroy.
• UK data to end the shortened week consists of final Q4 GDP.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.3bps at 2.829%, 5-Yr is down 5.8bps at 2.313%, 10-Yr is down 5.8bps at 2.292%, and 30-Yr is down 5.1bps at 2.456%.
• UK: The 2-Yr yield is down 3.7bps at 4.144%, 5-Yr is down 4bps at 3.817%, 10-Yr is down 3.9bps at 3.932%, and 30-Yr is down 3.4bps at 4.422%.
• Italian BTP spread up 1.8bps at 132.1bps / Spanish bond spread up 1.2bps at 84.3bps