EGBs-GILTS CASH CLOSE: Gilts Underperform As Rally Steadies Out

European yields were little changed Thursday, a contrast to the large rally in the previous two sessions, with Gilts underperforming Bunds.

• The session began with global core FI on the back foot, as Japanese yields spiked on senior BoJ officials implying they were eyeing an exit to negative rate policy.
• A weak German industrial production report helped yields reverse lower, though the rally had mostly petered out by midday.
• Afternoon trade was mixed, with US jobs data not really moving the needle, ahead of Friday's key US employment report.
• Periphery EGB spreads reversed early tightening and closed modestly wider, led by Greece.
• Friday's session brings a fairly limited European schedule, with an appearance by ECB's Muller and German final inflation the early highlights.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.4bps at 2.596%, 5-Yr is down 2.8bps at 2.137%, 10-Yr is down 0.9bps at 2.191%, and 30-Yr is up 2.9bps at 2.402%.
• UK: The 2-Yr yield is up 2.3bps at 4.517%, 5-Yr is up 2.7bps at 4.029%, 10-Yr is up 2.5bps at 3.968%, and 30-Yr is up 1.1bps at 4.46%.
• Italian BTP spread up 1.1bps at 174.6bps / Greek up 2bps at 118.3bps