EGBs-GILTS CASH CLOSE: German Short End Retreats On ECB Cut Pushback

Bunds underperformed Gilts Monday in a quieter session amid a US bond market holiday.

• The German curve bear flattened, with short-end underperformance reflecting 2024 rate cut pushback from across the ECB hawk-dove spectrum: this included Nagel, Holzmann, Herodotou, and (on Saturday) Lane.
• By comparison to Bunds, Gilt yields were steady across the curve, ahead of labour market and inflation data out Tuesday and Wednesday.
• Periphery spreads widened slightly, with GGBs underperforming.
• Data included soft (as expected) Eurozone industrial production data and an in-line German 2023 GDP growth estimate that underlined weakness in domestic demand.
• On Tuesday, in addition to the UK labour market data, we get final German/Italian inflation and the ZEW survey, with ECB inflation expectations featuring. Additionally we have appearances by ECB's Villeroy and BoE's Bailey.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is up 8.1bps at 2.598%, 5-Yr is up 6.4bps at 2.142%, 10-Yr is up 4.9bps at 2.233%, and 30-Yr is up 4bps at 2.435%.
• UK: The 2-Yr yield is up 0.1bps at 4.161%, 5-Yr is up 0.9bps at 3.67%, 10-Yr is up 0.4bps at 3.797%, and 30-Yr is up 2.7bps at 4.451%.
• Italian BTP spread up 2.3bps at 157.3bps / Greek up 2.4bps at 108.2bps