EGBs-GILTS CASH CLOSE: Greece Steals The Show

The German and UK curves bear flattened Monday, with GIlts underperforming. But Greece stole the show, with GGB yields collapsing after a market-friendly legislative election result over the weekend.

• Greek 10Y BTP yields fell 14bp, dropping to the lowest spread vs Bunds since January 2022, and reaching the highest premium vs BTPs in the euro era.
• Otherwise, most European instruments sold off steadily following a constructive start, with most weakness between 1000-1400UK time.
  
• The largest single move of the day came on false reports on social media of an explosion outside the US Pentagon which were quickly debunked. Bund and Gilt yields dropped 3bp but quickly reversed to set fresh session highs.
• There were few macro catalysts besides. ECB's Villeroy noted a likely peak in rates by September, but this was no surprise and markets were unmoved.
• Tuesday sees several central bank appearances, including ECB's de Guindos, Muller, Villeroy and Nagel, as well as BoE's Bailey and Haskel. Additionally, after a quiet day on the data front, the flow picks up Tuesday with May flash PMIs.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.2bps at 2.809%, 5-Yr is up 4.2bps at 2.448%, 10-Yr is up 3.1bps at 2.459%, and 30-Yr is up 3.1bps at 2.634%.
• UK: The 2-Yr yield is up 9.3bps at 4.053%, 5-Yr is up 8.1bps at 3.903%, 10-Yr is up 6.8bps at 4.064%, and 30-Yr is up 3.8bps at 4.452%.
• Italian BTP spread up 1.1bps at 185.5bps / Greek down 17.3bps at 141.8bps