EGBs-GILTS CASH CLOSE: Gilts Only Partially Recover

Tuesday's Gilt selloff partially reversed Wednesday as UK yields fell led by the short-end. The German curve bear flattened ahead of Thursday's ECB decision.

• UK yields traded with more directional (downward) impetus than German counterparts, which weakened on the day but lacked clear direction.
• Even with a 7bp decline in yields (UK Apr GDP was a little softer than expected), with a fairly strong last hour of trade, 2Y Gilts sit 18bp higher than Monday's open.
• Periphery spreads likewise gave back some of Tuesday's tightening vs Bunds. Greek spreads widened for the 3rd straight session following the lack of ratings action from Fitch last Friday.
• BoE terminal hike pricing pulled back 7bp on the day, with ECB +2bp.
• Attention turns to the Federal Reserve decision after hours (no change in rates expected), with the ECB waiting in the wings Thursday (to hike rates by 25bp and confirm previous decision to end APP reinvestments in July - our preview is here).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.2bps at 3.016%, 5-Yr is up 3.2bps at 2.507%, 10-Yr is up 2.9bps at 2.452%, and 30-Yr is up 2bps at 2.584%.
• UK: The 2-Yr yield is down 7.5bps at 4.822%, 5-Yr is down 5.6bps at 4.472%, 10-Yr is down 4.2bps at 4.392%, and 30-Yr is down 5.6bps at 4.559%.
• Italian BTP spread up 0.4bps at 163.6bps / Greek up 2.9bps at 131.3bps