EGBs-GILTS CASH CLOSE: German Inversion Deepens

European yields dropped sharply Wednesday in a mostly bull-flattening motion.

• German 2s10s inversion set a fresh record for this cycle as part of a global flattening move, which occurred despite largely in-line/above-expected global data (including 41-year high UK CPI).
• A multitude of ECB speakers (de Cos, Villeroy, Muller, Makhlouf among others) leaned mostly dovish on aggregate - terminal rate pricing fell 3bp on the day.
• BTP spreads fell again but 10Y/Bund climbed 6bp off session lows.
• Banks' early TLTRO repayments come into focus later this week (see our analysis of expectations, including links to MNI Policy exclusive interviews).
• Gilts outperformed, with yields across the curve now well below pre-Sept mini-budget. Focus now turns to the UK Autumn Statement Thursday (preview here).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 7.5bps at 2.095%, 5-Yr is down 11.1bps at 1.955%, 10-Yr is down 11.2bps at 1.996%, and 30-Yr is down 11.5bps at 1.937%.
• UK: The 2-Yr yield is down 10.8bps at 2.993%, 5-Yr is down 12.4bps at 3.19%, 10-Yr is down 14.6bps at 3.149%, and 30-Yr is down 15.8bps at 3.313%.
• Italian BTP spread down 1.4bps at 193.8bps / Greek up 9bps at 225.3bps