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BONDS: EGBs-GILTS CASH CLOSE: German Short End Leads Gains On ECB, Soft Data

BONDS
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EGBs and GIlts rallied Thursday after the ECB decision and soft Eurozone data.

  • While the ECB 25bp cut didn't surprise, and there were few revelations in Lagarde's press conference, the German short end led gains as ECB cut pricing deepened (by 8bp for end-year to close to 78bp vs 70bp prior).
  • Even before the ECB, bonds had been on the front foot, following an overnight recovery in US Treasuries from an initial drop on the Fed's slightly hawkish hold.
  • Weak flash Q4 GDP prints in France, Germany, Italy and the Eurozone provided impetus to the European FI rally. Spanish inflation came in a little higher than expected on both a monthly and annual basis, though core CPI was a touch softer, with some indications of benign services prices developments.
  • The German and UK curves both bull steepened. Periphery EGB / semi-core spreads closed slightly wider - OATs underperformed again on lingering French political risk concerns.
  • Friday's scheduled highlight is inflation data from France and Germany. (MNI's Eurozone inflation preview is  here).

Closing Yields / 10-Yr EGB Spreads To Germany

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EGBs and GIlts rallied Thursday after the ECB decision and soft Eurozone data.

  • While the ECB 25bp cut didn't surprise, and there were few revelations in Lagarde's press conference, the German short end led gains as ECB cut pricing deepened (by 8bp for end-year to close to 78bp vs 70bp prior).
  • Even before the ECB, bonds had been on the front foot, following an overnight recovery in US Treasuries from an initial drop on the Fed's slightly hawkish hold.
  • Weak flash Q4 GDP prints in France, Germany, Italy and the Eurozone provided impetus to the European FI rally. Spanish inflation came in a little higher than expected on both a monthly and annual basis, though core CPI was a touch softer, with some indications of benign services prices developments.
  • The German and UK curves both bull steepened. Periphery EGB / semi-core spreads closed slightly wider - OATs underperformed again on lingering French political risk concerns.
  • Friday's scheduled highlight is inflation data from France and Germany. (MNI's Eurozone inflation preview is  here).

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less