EGBs-GILTS CASH CLOSE: Gilts Outperform Ahead Of Fed/ECB/BoE

EGBs and Gilts strengthened Tuesday, ahead of multiple key central bank decisions in the coming two days.

• Core FI started the session on the front foot, with softer-than-expected UK wage data setting the stage for Gilt outperformance throughout the day. German/Eurozone ZEW surveys showed improved investor expectations, but the reading was shrugged off.
• The knee-jerk reaction from largely in-line US inflation data saw Bunds and Gilts touch session highs in early afternoon trade, but the move swiftly reversed as increasing attention was put on a robust "supercore" CPI reading ahead of Wednesday's Federal Reserve decision.
• Both the German and UK curves leaned bull steeper on the day.
• Periphery EGB spreads closed mostly tighter to Bunds, with Greece lagging.
• With little on the European docket Wednesday, all attention will be on US data and the Fed decision after the European close - ahead of the ECB (MNI preview here) and BoE (MNI preview here) decisions on Thursday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.1bps at 2.709%, 5-Yr is down 2.5bps at 2.21%, 10-Yr is down 4.4bps at 2.226%, and 30-Yr is down 5.9bps at 2.401%.
• UK: The 2-Yr yield is down 8.5bps at 4.529%, 5-Yr is down 10.7bps at 4.04%, 10-Yr is down 11.1bps at 3.967%, and 30-Yr is down 7.4bps at 4.474%.
• Italian BTP spread down 1.6bps at 177.8bps / Spanish down 1.4bps at 101.5bps