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EGBs-GILTS CASH CLOSE: Gilts Underperform As PM's Future Hangs In Balance


Gilts underperformed as both UK and German yields hit multi-year highs Monday.

  • UK focus was on a confidence vote in PM Johnson (results set for 2100BST), with EGB traders eyeing this week's ECB meeting. The German curve bear steepened, with the UK a little flatter in the return from a 4-day weekend. 10Y yields hit post-2014 highs in both cases.
  • Italy 10Y spreads narrowed by over 9bp shortly after the open as markets digested multiple reports that the ECB was eyeing anti-fragmentation tool plans.
  • Greece went in the opposite direction, with spreads widening as much as 18bp with little apparent explanation, though some desks pointing to both a retracement of last week's rally, as well as low liquidity.

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

  • Germany: The 2-Yr yield is up 3.1bps at 0.693%, 5-Yr is up 3.5bps at 1.05%, 10-Yr is up 4.9bps at 1.322%, and 30-Yr is up 5.3bps at 1.575%.
  • UK: The 2-Yr yield is up 9.5bps at 1.78%, 5-Yr is up 10.2bps at 1.869%, 10-Yr is up 9.2bps at 2.247%, and 30-Yr is up 6.5bps at 2.481%.
  • Italian BTP spread down 3.7bps at 209.4bps / Greek up 11bps at 256bps

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