EGBs-GILTS CASH CLOSE: Gilts Outperform On Saunders Comments

Gilts easily outperformed Bunds Friday, with dovish comments from BoE's Saunders driving down rate hike expectations ahead of the bank's key December meeting.

• The short-end/belly of the UK curve outperformed in a bull steepening move; in contrast, Germany's curve saw bull flattening.
• European bonds knee-jerked higher in tandem w USTs on a disappointing headline US jobs figure, but the underlying details were strong and core FI reversed lower. As the afternoon went on, though, bonds were pulled higher by a decline in equities to session (though not quite week's) lows.
• Periphery EGB spreads mostly tightened (including Italy ahead of a Fitch ratings review after hours Friday), Greece the exception.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.7bps at -0.743%, 5-Yr is down 0.6bps at -0.633%, 10-Yr is down 1.9bps at -0.388%, and 30-Yr is down 3.2bps at -0.097%.
• UK: The 2-Yr yield is down 6.4bps at 0.478%, 5-Yr is down 6.5bps at 0.59%, 10-Yr is down 6bps at 0.751%, and 30-Yr is down 5.7bps at 0.843%.
• Italian BTP spread down 1.8bps at 130.5bps / Greek up 2.1bps at 160.1bps