BONDS: EGBs-GILTS CASH CLOSE: Modest Steepening, Tracking Treasuries

European yields moved in a fairly wide range but closed little changed Friday.

• Gilts and Bunds weakened in morning trade,  with equities bid, and the space generally following the lead of US Treasuries for a second consecutive session.
• Core European FI rallied as the highly anticipated US employment report was taken favourably by rates markets, with aggregate payroll gains in line with expectations, but the unemployment rate moving a little higher than foreseen. But the move faded toward the cash close, again mirroring a modest pullback in Treasuries.
• The German curve marginally twist steepened on the day, with the UK's modestly bull steepening.
• After opening tighter to Bunds, OAT spreads retraced move of the initial move, widening throughout the session on continued political uncertainty after this week's government collapse. Periphery EGB spreads followed a similar path, finishing little changed on the day.
• Next week's highlight is the ECB meeting (a 25bp cut remains fully priced, little changed Friday) - we also get UK monthly activity data and an appearance by BoE's Ramsden.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.7bps at 2.001%, 5-Yr is down 1.7bps at 1.969%, 10-Yr is down 0.3bps at 2.108%, and 30-Yr is up 0.5bps at 2.316%.
• UK: The 2-Yr yield is down 1.3bps at 4.261%, 5-Yr is down 1.2bps at 4.133%, 10-Yr is down 0.6bps at 4.275%, and 30-Yr is down 0.3bps at 4.808%.
• Italian BTP spread down 0.2bps at 108.5bps / French OAT down 0.6bps at 76.8bps