EGBs-GILTS CASH CLOSE: German Short End Reverses Early Weakness

Bunds outperformed and the German curve bull flattened to start the week, with UK yields also trading lower.

• Core EGBs enjoyed a bounce from large losses late last week, amid a risk-on session for equities (most Eurozone bourses were up around 2%) and FX, with the Euro and Sterling bouncing. Periphery EGB spreads tightened, led by Greece.
• Early attention was on the weekend's hawkish ECB speaker commentary, following on from various media sources pieces late last week that largely pointed to ECB tightening ambitions for the rest of the year.
• Even so, short-end German yields reversed lower over the course of the session.
• ECB hike pricing finished flat and BoE marginally softer, with Tuesday's U.S. inflation report awaited to set the near-term direction.

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

• Germany: The 2-Yr yield is down 0.8bps at 1.319%, 5-Yr is down 4.6bps at 1.492%, 10-Yr is down 4.5bps at 1.653%, and 30-Yr is down 5.8bps at 1.75%.
• UK: The 2-Yr yield is down 2bps at 3.034%, 5-Yr is up 0.2bps at 2.989%, 10-Yr is down 1.3bps at 3.082%, and 30-Yr is down 2.6bps at 3.45%.
• Italian BTP spread down 1bps at 231bps / Greek down 4.3bps at 253.9bps