EGBs-GILTS CASH CLOSE: Gains Resume Ahead Of Euro Inflation Round

Gilts and Bunds resumed their advance Tuesday, with bull flattening in the UK and German curves.

• Central bank hawks came across relatively dovish: BoE's Mann didn't explicitly say that rate cuts weren't appropriate at this stage (just that market expectations had gone too far), while ECB's Muller noted that the time for rate cuts is drawing nearer.
• Data was fairly inconsequential from a markets perspective, but some attention was paid to a wider-than-expected 2023 French fiscal deficit which posed upside risks to 2024's shortfall and makes further spending cuts likely - OAT spreads to core EGBs had widened in recent days amid pre-release reports of a large deficit.
• Overall, core instruments traded well within Monday's ranges. Periphery EGB spreads tightened modestly to Bunds in a broadly risk-on session.
• Spain kicks off the March flash inflation round on Wednesday morning - our preview of the Eurozone-wide data went out today (PDF here).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.3bps at 2.872%, 5-Yr is down 1.8bps at 2.371%, 10-Yr is down 2.2bps at 2.35%, and 30-Yr is down 1.9bps at 2.507%.
• UK: The 2-Yr yield is down 0.3bps at 4.181%, 5-Yr is down 1.5bps at 3.857%, 10-Yr is down 1.7bps at 3.971%, and 30-Yr is down 2.8bps at 4.456%.
• Italian BTP spread down 1.9bps at 130.3bps / Spanish down 0.7bps at 83.1bps