EGBs-GILTS CASH CLOSE: Gilts Underperform As Solid Start Fades

European curves closed Monday bear flatter, with Gilts underperforming Bunds.

• Core FI got off to a solid start, following an unanticipated rate cut overnight by the Chinese central bank.
• That gave way to weakness led by Treasuries as the session progressed, with some pointing to US political uncertainty after Pres Biden withdrew from the presidential election. European core FI yields closed near the highs.
• Gilts underperformed, in part due to new Chancellor Reeves' indications of above-inflation pay rises for UK public sector workers.
• Periphery spreads tightened, led by BTPs and GGBs, mirroring a strong bounce in equities.
• Tuesday's docket is limited, with an appearance by ECB Chief Economist Lane and preliminary Eurozone consumer confidence the highlights.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.5bps at 2.829%, 5-Yr is up 3.9bps at 2.46%, 10-Yr is up 2.8bps at 2.495%, and 30-Yr is up 1.5bps at 2.679%.
• UK: The 2-Yr yield is up 6bps at 4.063%, 5-Yr is up 5.2bps at 3.98%, 10-Yr is up 3.8bps at 4.161%, and 30-Yr is up 3.3bps at 4.669%.
• Italian BTP spread down 3.3bps at 127.9bps / Greek down 2.9bps at 95.4bps