EGBs-GILTS CASH CLOSE: Gilt Yields Jump With Data And Event Risk Looming

Gilts easily underperformed across global core instruments Monday, with UK yields up nearly double-digits in parallel across the curve. The German curve twist steepened ahead of the ECB decision on Thursday.

• Amid a fairly quiet session for data and headlines, it was difficult to identify a trigger for large moves in the afternoon, which saw yields spike from 2pm UK time onward. The move was made slightly more baffling by a sharp drop in oil prices alongside.
• There was not much new from BoE's Mann this afternoon, whose comments unsurprisingly leaned hawkish (pointing out her concerns that services inflation remained "sticky"), but desks reported some squaring of long positions in Gilts.
• The latter came in the context of risks looming large for the rest of the week, including data (US CPI Tuesday) and event (Fed, ECB, BoJ decisions) flashpoints.
• Periphery spreads mostly tightened against a risk-on backdrop with equities gaining through most of the session.
• The exception was Greece, which underperformed in the wake of Fitch's decision Friday to to affirm Greece’s BB+; Outlook Stable sovereign credit rating status.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.2bps at 2.914%, 5-Yr is down 0.1bps at 2.421%, 10-Yr is up 1.1bps at 2.388%, and 30-Yr is up 3.4bps at 2.55%.
• UK: The 2-Yr yield is up 9.5bps at 4.636%, 5-Yr is up 9.7bps at 4.347%, 10-Yr is up 9.9bps at 4.338%, and 30-Yr is up 9bps at 4.572%.
• Italian BTP spread down 6.8bps at 166.9bps / Greek up 4.2bps at 132.8bps