EGBs-GILTS CASH CLOSE: Long End Surrenders Some Recent Gains

Bunds and Gilts weakened marginally Thursday, with both the German and UK curves twist steepening as long-end instruments gave up some of the strong gains of the previous two sessions.

• Price action was fairly limited after weakness in the morning, with few Europe-specific drivers on the day, and UK and German curve movements were roughly in line with Treasuries. Despite no European gov't bond issuance, the longer end was pulled down by US counterparts, ahead of a 30Y Treasury auction.
• Speakers were the focus, with BoE's Pill making more hawkishly-perceived comments on rates relative to Monday's appearance in which he appeared to open the door to a late 2024 rate cut (though as MNI noted, the central thrust of his remarks was similar).
• ECB speakers have had little discernable market impact: Guindos and Villeroy both adding to colleagues' recent commentary that rate cut discussion is premature, with Villeroy emphasizing though that rates won't rise further absent shocks or surprises.
• ECB's Lagarde speaks after the cash close, with attention then turning to UK activity/GDP data first thing Friday, followed by Italian supply.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.9bps at 3.006%, 5-Yr is up 0.8bps at 2.577%, 10-Yr is up 3bps at 2.647%, and 30-Yr is up 7bps at 2.883%.
• UK: The 2-Yr yield is down 0.2bps at 4.618%, 5-Yr is up 1.1bps at 4.253%, 10-Yr is up 3.3bps at 4.273%, and 30-Yr is up 4.1bps at 4.732%.
• Italian BTP spread up 0.1bps at 186.4bps / Portuguese PGB down 1.2bps at 73.3bps