EGBs-GILTS CASH CLOSE: Historic Rally As Recession Talk Swirls

EGBs had one of their strongest daily rallies in recent history Thursday, as much weaker-than-expected June flash PMI data indicated rapidly weakening European economic activity.

• Amid a bull steepening curve move, Bobl yields fell at one point by the fastest (over 30bp) since 1998, and closed about 60bp off the month's highs.
• Bunds rallied the most in a decade, testing support at 1.40%.
• Periphery EGBs and Gilts couldn't keep pace with the blistering German rally.
• The UK curve shifted down in parallel by about 20bp through the 10Y segment.
• BTP spreads widened, while GGBs underperformed.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is down 25bps at 0.812%, 5-Yr is down 26.2bps at 1.159%, 10-Yr is down 21.2bps at 1.426%, and 30-Yr is down 14.9bps at 1.686%.
• UK: The 2-Yr yield is down 20.5bps at 1.939%, 5-Yr is down 20.5bps at 1.961%, 10-Yr is down 18.2bps at 2.317%, and 30-Yr is down 15.9bps at 2.572%.
• Italian BTP spread up 5.1bps at 195.8bps / Greek up 11.2bps at 234.7bps