EGBs-GILTS CASH CLOSE: Gilts Underperform As Europe Enters Long Weekend

The German curve bear flattened Friday, with the UK's bear steepening.

• While core yields had risen early in the session following an upside surprise in UK GDP data, yields began fading by early afternoon. The nascent rally was nipped in the bud by stronger-than-expected US UMichigan consumer confidence data, and European yields finished close to the middle of the day's ranges.
• UK 10Y spreads vs Germany continued to widen, reaching the widest since March 23 (112bp).
• Periphery spreads widened with the notable exception of Greece, which had been underperforming all week.
• BTP spreads widened suddenly in the afternoon (well before the UMichigan data) but narrowed again into the close, with no obvious catalyst seen.
• Note that several Eurozone countries observe holidays Monday, including France, Germany, Italy, and Spain.

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

• Germany: The 2-Yr yield is up 4.3bps at 0.609%, 5-Yr is up 4.4bps at 0.756%, 10-Yr is up 1.7bps at 0.988%, and 30-Yr is up 0.9bps at 1.238%.
• UK: The 2-Yr yield is up 5bps at 2.052%, 5-Yr is up 4.8bps at 1.93%, 10-Yr is up 5.1bps at 2.11%, and 30-Yr is up 8.6bps at 2.535%.
• Italian BTP spread up 2.1bps at 208bps / Greek down 1.6bps at 225bps