EGBs-GILTS CASH CLOSE: Peripheries Outperform

Bunds underperformed Gilts with the German curve bear flattening Monday.

• Core FI got off to a weak start in digesting weekend developments including stronger oil prices before stabilising mid-morning, only to relapse to session's weakest levels around midday despite no discernable headline triggers.
• While they recovered from session lows, Bunds' underperformance came amid uncertainty over the medium-term fiscal impact of last week's German court ruling on the government's usage of off-balance sheet COVID funds (BBG published a sources article in the afternoon corroborating weekend reports that the debt brake might be suspended for 2023).
• Periphery EGBs benefited from Moody's after hours on Friday revising Italy's outlook to stable from negative, and revising Portugal's rating up two notches to A3 (outlook stable).
• In contrast to the German curve, the UK's twist steepened, with fiscal matters in focus in the form of the Autumn Statement's release Wednesday (and ahead of that, public finance data first thing Tuesday morning). Tuesday sees BoE's Bailey and colleagues before a parliamentary committee.
• Also Tuesday, we get several ECB speakers including Lagarde, Schnabel, and Centeno.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.3bps at 3.027%, 5-Yr is up 4bps at 2.571%, 10-Yr is up 2.3bps at 2.611%, and 30-Yr is up 0.1bps at 2.803%.
• UK: The 2-Yr yield is down 1.5bps at 4.531%, 5-Yr is down 0.7bps at 4.112%, 10-Yr is up 2.1bps at 4.125%, and 30-Yr is up 1.1bps at 4.552%.
• Italian BTP spread down 3.6bps at 173.4bps / Portuguese down 2.3bps at 64.2bps