EGBs-GILTS CASH CLOSE: Gilts Outperform Bunds On The Week

Core European yields edged higher to close out the week.

• Gilts failed to be dented by a stronger-than-expected UK GDP report to kick off the session, with limited data and supply (Italy) keeping trade constructive if relatively subdued in the morning.
• Afternoon data from North America saw global core FI retreat for the rest of the European cash session, with strong Canadian jobs data and elevated US consumer inflation expectations casting doubt on dovish developments earlier in the week.
• The UK and German curves bear flattened on the day, with Gilts slightly underperforming Bunds.
• The late session weakness ensured that 10Y Bund yields closed the week higher (by 2bp). UK counterparts finished 7bp off their weekly lows but still fell over 5bp on the week, helped by a dovishly-perceived BoE decision on Thursday.
• Periphery EGB spreads were mixed, after coming off early session tights along with the broader FI sell-off.
• UK labour market data is the highlight of the docket early next week.

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

• Germany: The 2-Yr yield is up 2.9bps at 2.967%, 5-Yr is up 2.9bps at 2.55%, 10-Yr is up 2.2bps at 2.517%, and 30-Yr is up 2bps at 2.651%.
• UK: The 2-Yr yield is up 4bps at 4.319%, 5-Yr is up 3.6bps at 4.038%, 10-Yr is up 2.4bps at 4.166%, and 30-Yr is up 2.1bps at 4.645%.
• Italian BTP spread down 0.2bps at 134bps / Spanish up 0.2bps at 79.4bps