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EGBs-GILTS CASH CLOSE: Intraday Reversal; GGBs Underperform

BONDS

Gilts (and GGBs) underperformed as stronger-than-expected UK December CPI set a bearish tone for Wednesday's session, added to by a nascent stabilisation in equities.

  • Greece's 10-Yr syndication was seen as having soft demand, with E3bln sold on books of >E15bln, about half the demand of last June's sale. GGB spreads widened ~10bp.
  • GIlt yields ended sharply higher across the curve, but closing levels reflected an intraday move lower from multi-month highs.
  • 10Y Bund yields crossed the 0.00% watermark at the open, but ended negative.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is unchanged at -0.57%, 5-Yr is up 0.3bps at -0.341%, 10-Yr is up 0.6bps at -0.012%, and 30-Yr is up 1.4bps at 0.293%.
  • UK: The 2-Yr yield is up 4.1bps at 0.908%, 5-Yr is up 3.3bps at 1.057%, 10-Yr is up 3.9bps at 1.256%, and 30-Yr is up 4.3bps at 1.372%.
  • Italian BTP spread up 1.6bps at 135.1bps / Greek up 9.6bps at 174.3bps

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