EGBs-GILTS CASH CLOSE: Holzmann's 50s Bear Flatten German Curve

Commentary by ECB officials drove most of the price action in Monday's trade, with Germany leading the European bear flattening move.

• There was limited reaction to ECB Chief Economist Lane's speech on underlying inflation dynamics (which reinforced that hikes were set to continue past March), but an interview with Austria's Holzmann calling for 4 consecutive 50bp hikes saw the German short end sell off sharply around midday.
• The latter set a hawkish tone following a constructive start to the session. ECB terminal rate expectations rose to a fresh cycle high just shy of 4.10%.
• Gilts followed the lead of Bunds; periphery EGB spreads were mostly wider.
• Most activity in the futures space was spread related, with the quarterly roll nearly complete ahead of Wednesday's deadline.
• Data flow picks up early Tuesday with German factory orders.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 10.1bps at 3.315%, 5-Yr is up 6.2bps at 2.898%, 10-Yr is up 3.4bps at 2.749%, and 30-Yr is up 0.1bps at 2.663%.
• UK: The 2-Yr yield is up 7.7bps at 3.776%, 5-Yr is up 5.1bps at 3.703%, 10-Yr is up 1.7bps at 3.866%, and 30-Yr is up 0.1bps at 4.214%.
• Italian BTP spread up 1.1bps at 182.6bps / Spanish up 0.2bps at 94.8bps