EGBs-GILTS CASH CLOSE: Gilts Underperform Again To Close The Week

Gilts were stronger Friday but underperformed Bunds yet again, with periphery EGB spreads tighter to end the week.

• Price action came on strong volumes and was dictated largely by weaker equities setting a risk-off tone, with largely in-line PMI and inflation data not moving the needle much in the morning. That said, a strong US ISM number saw core FI weaken in the European afternoon.
• The 10Y segment on both the German and UK curves outperformed, with the Gilt/Bund spread widening to a fresh 5-yr high (124bp at one point).
• After hours Friday, S&P rates France. The ESM, Austria, Germany, Spain, France and Belgium are all due to issue bonds next week, while Industrial Production data takes centre stage.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.5bps at -0.704%, 5-Yr is down 2.3bps at -0.579%, 10-Yr is down 2.3bps at -0.222%, and 30-Yr is down 1.7bps at 0.259%.
• UK: The 2-Yr yield is down 0.6bps at 0.404%, 5-Yr is down 0.9bps at 0.629%, 10-Yr is down 1.4bps at 1.008%, and 30-Yr is down 0.2bps at 1.372%.
• Italian BTP spread down 1.9bps at 103.8bps / Spanish down 1bps at 64.8bps