EGBs-GILTS CASH CLOSE: Hawkish Turns

The BoE and ECB each surprised to the hawkish side with their decisions on "Super Thursday", leading to one of the biggest routs in European fixed income in recent years.

• The BoE hiked 25bp as expected, but that was almost an unexpected 50bp hike (favoured by 4 of 9 voters). Then Lagarde repeatedly refused to declare a 2022 ECB rate hike as "unlikely" and emphasised upside inflation concerns.
• Markets repriced accordingly. 40bp of ECB hikes are now seen (incl 10bp by Jul, 40bp by end-year); German 2Y yields rose by the most since Sept 2019, 10Y BTP since April 2020.
• UK FI "outperformed" but yields were also up double-digits.
• Little let-up Friday, with the US employment report set for release.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 12.9bps at -0.329%, 5-Yr is up 14bps at -0.04%, 10-Yr is up 10.5bps at 0.145%, and 30-Yr is up 4.4bps at 0.333%.
• UK: The 2-Yr yield is up 11.7bps at 1.146%, 5-Yr is up 11.4bps at 1.222%, 10-Yr is up 11.2bps at 1.369%, and 30-Yr is up 9.6bps at 1.457%.
• Italian BTP spread up 11bps at 150bps / Spanish up 5.3bps at 79.7bps