EGBs-GILTS CASH CLOSE: Impressive Rally As Rate Hike Pricing Fades

In a near-repeat of Monday's price action, early losses in core European FI were erased in the second half of Tuesday's session after the release of weaker-than-expected US job openings data.

• Yields rose in the morning with moderate bear steepening as equities gained and the euro and sterling pushed to multi-month highs versus the dollar.
• The outsized reaction to the 600k US job openings miss was exaggerated by thin volumes throughout the session.
• Regardless, curves twist steepened sharply with short-ends rallying as ECB and BoE hikes were priced out in sympathy with rising expectations of Fed cuts.
• Periphery EGB spreads widened moderately throughout the session.
• Little reaction to European data, with Eurozone PPI in line. BoE Chief Econ Pill's gave a speech that tilted to the hawkish side, but market reaction was limited as it was released amid the JOLTS rally.
• German factory orders and French industrial production data feature early Wednesday, with Spain/Italy Services PMIs eyed later in the session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 7.3bps at 2.601%, 5-Yr is down 4.5bps at 2.242%, 10-Yr is down 0.6bps at 2.249%, and 30-Yr is up 3bps at 2.336%.
• UK: The 2-Yr yield is down 3.7bps at 3.353%, 5-Yr is down 2.6bps at 3.274%, 10-Yr is up 0.4bps at 3.434%, and 30-Yr is down 0.7bps at 3.751%.
• Italian BTP spread up 2bps at 186.6bps / Spanish up 1.1bps at 103.1bps