EGBs-GILTS CASH CLOSE: Greece Spread Widening Stands Out

Gilts easily outperformed Bunds to start the week, with cheapening Greek paper representing the most notable move in the EGB space Monday.

• Germany's curve twist flattened with Schatz yields 4+bp wider on the day as ECB terminal hike pricing likewise firmed 4bp (peak depo rates seen at 4.05%, within 1bp of June's high) after Villeroy's comments over the weekend that he saw policy rates higher for longer.
• Conversely the UK curve leaned bull steeper, with few catalysts on the day - BoE Gov Bailey's Mansion House speech brought little new, and Gilts/terminal BoE pricing remained steady.
• News of a Greek 15Y bond syndication (alongside a switch/tender offer) induced a sharp selloff in GGBs that saw the spread close nearly 11bp wider, and well off the tights below 120bp seen last month.
• Tuesday morning kicks off with UK jobs data and final German inflation.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.3bps at 3.296%, 5-Yr is up 1.8bps at 2.757%, 10-Yr is up 0.1bps at 2.638%, and 30-Yr is down 0.3bps at 2.644%.
• UK: The 2-Yr yield is down 2.3bps at 5.37%, 5-Yr is down 0.6bps at 4.845%, 10-Yr is down 1.2bps at 4.638%, and 30-Yr is down 1.1bps at 4.676%.
• Italian BTP spread up 2.8bps at 174.7bps / Greek up 10.7bps at 144.5bps