EGBs-GILTS CASH CLOSE: Lagarde Fuels Periphery Spread Compression

Gilt and Bund yields rose sharply on the open, before falling for most of the session, then edging higher in the afternoon into the close. The UK curve steepened (w an eye on heavy long-end supply Thursday perhaps), while Germany's flattened.

• Periphery spreads narrowed sharply as ECB Pres Lagarde began introductory remarks at the Sintra conference, cued by her insistence that PEPP was effective and remained one of the ECB's main tools.
• UK linker and German Bund auctions came and went without much fanfare; no data of note.
• The Sintra conference continues tomorrow (names like Lagarde and Bailey), with prelim UK Q3 GDP leading off the data docket first thing. Italy, Ireland and the UK hold auctions.

Closing Levels / 10-Yr Periphery EGB Spreads:

• Germany: The 2-Yr yield is down 0.4bps at -0.715%, 5-Yr is down 1.2bps at -0.71%, 10-Yr is down 2.2bps at -0.507%, and 30-Yr is down 2.8bps at -0.073%.
• UK: The 2-Yr yield is down 0.5bps at 0.001%, 5-Yr is up 1.4bps at 0.059%, 10-Yr is up 1.2bps at 0.413%, and 30-Yr is up 2.3bps at 1.015%.
• Italian BTP spread down 0.2bps at 124.5bps
• Spanish bond spread down 0.7bps at 66.4bps