BONDS: EGBs-GILTS CASH CLOSE: Gilts Modestly Outperform

Gilts modestly outperformed Bunds Monday.

• Core European bonds faded slightly in the post-weekend re-open, with EGBs weighed down by higher gas prices, and only a fairly muted reaction to US President Trump's declaration of steel and alluminium tariffs.
• With no Tier 1 data on Monday's schedule, Bund and Gilt yields drifted lower in afternoon trade amid a modest pickup in market bids though no clear headline catalyst - all within last week's ranges.
• ECB's Lagarde reiterated in her remarks to the EU Parliament that inflation remains on track to reach 2% but that "greater friction in global trade would make the euro area inflation outlook more uncertain.”
• The UK and German curves moderately bull steepened on the day. Front-ends were boosted by an extension of central bank cut pricing (ECB end-2025 to 90bp vs 87bp Friday, BoE to 65bp from 60bp).
• Periphery EGB spreads were mostly tighter, with Greece's widening slightly (BTPs saw little reaction to an Italy syndication 15Y syndication announcement, which had been anticipated by MNI).
• Tuesday's agenda includes pricing of the syndication of the new 4.50% Mar-35 gilt and scheduled comments from BoE’s Bailey & Mann (see MNI's Gilt Week Ahead for more, PDF), while ECB's Schnabel speaks on a panel.

Closing Yields / 10-Yr EGB Spreads To Germany