EGBs-GILTS CASH CLOSE: OAT Spreads Off Wides Ahead Of French Elections

European curves continued to steepen Friday, with Gilts outperforming Bunds.

• Bunds and Gilts rallied sharply in early afternoon on benign US PCE inflation data, but weakness resumed heading to the European cash close and the month and quarter-end.
• June flash inflation data for France/Spain/Italy was in line, spurring limited market reaction.
• The UK curve twist steepened, with Germany's bear steepening.
• 10Y OAT/Bund spreads came off Thursday's 12-year wide close and an intraday level near 85bp to close at 80bp ahead of the weekend's first round of French legislative elections.
• Periphery spreads closed mixed, with BTPs outperforming.
• Beyond the weekend's French elections (MNI preview here), next week's schedule includes German and Eurozone flash inflation, the ECB's Sintra forum, and the UK election.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.6bps at 2.833%, 5-Yr is up 4bps at 2.482%, 10-Yr is up 5.2bps at 2.5%, and 30-Yr is up 5.5bps at 2.691%.
• UK: The 2-Yr yield is down 1.5bps at 4.221%, 5-Yr is up 1.3bps at 4.024%, 10-Yr is up 4.2bps at 4.172%, and 30-Yr is up 4.9bps at 4.659%.
• Italian BTP spread down 0.5bps at 157.2bps / Spanish up 1.3bps at 91.9bps