EGBs-GILTS CASH CLOSE: Peripheries Impress Pre-ECB

Gilts and Bunds traded mixed Wednesday, with yields climbing from morning lows as the post-close Fed decision and Thursday's ECB came into sight.

• The German curve twist flattened, while the UK saw a mostly parallel shift with yields up 3bp apart from 5Yrs which were up just 2bp.
• Periphery EGBs impressed, with 10Y Italy and Greek spreads respectively down 4bp and 9bp vs Bunds. Sharp BTP spread tightening into the cash close was noteworthy, ahead of the ECB decision Thursday.
• ECB and BoE hike pricing closed on firmer footing, up 3.7bp to 3.72% and 1.6bp to 4.93%, respectively. 25bp hikes are seen as near-locks for May.
• In the ECB's case, a 50bp raise tomorrow has about 15-20% probability attached. Our preview for Thursday's highlight - the ECB decision - is here.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.7bps at 2.641%, 5-Yr is unchanged at 2.245%, 10-Yr is down 1.1bps at 2.247%, and 30-Yr is down 0.9bps at 2.371%.
• UK: The 2-Yr yield is up 3.1bps at 3.768%, 5-Yr is up 1.8bps at 3.569%, 10-Yr is up 2.7bps at 3.696%, and 30-Yr is up 3.3bps at 4.095%.
• Italian BTP spread down 4.4bps at 187.1bps / Greek down 8.9bps at 184.7bps