EGBs-GILTS CASH CLOSE: Peripheries Outperform Amid Supply Deluge

Core EGB yields continued to rise Wednesday amid a deluge of supply, with UK yields also ticking higher.

• This week has seen a new record of E108bln in primary issuance in Europe (Bloomberg), including sovereigns as well as corporates/SSA, with more yet to come over the next two days (including an Ireland syndication Thursday). Today Spain sold E15bln of 10Y paper on orderbooks of E138bln, while Estonia sold E1bln in 10Y.
• Bund yields reversed higher in the afternoon after a constructive start, with 10Y German yields closing at their highest level since Dec 12.
• The high evident demand for Spanish debt, and Bund weakness, helped EGB periphery spreads tighten, with BTP/Bund narrowing to the lowest levels of the year.
• The German curve leaned bear flatter, with the UK's bear steepening slightly.
• There was only 2nd tier European data on the docket (Italian retail sales beat, French industrial production disappointed), and speakers including ECB's Schnabel (who noted that it was still too early to discuss rate cuts) and BoE's Bailey didn't have much of a market impact.
• Thursday's main event is US CPI.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.9bps at 2.649%, 5-Yr is up 3.4bps at 2.17%, 10-Yr is up 2.4bps at 2.212%, and 30-Yr is up 0.2bps at 2.418%.
• UK: The 2-Yr yield is up 2.4bps at 4.235%, 5-Yr is up 2.8bps at 3.755%, 10-Yr is up 3.7bps at 3.819%, and 30-Yr is up 2.4bps at 4.415%.
• Italian BTP spread down 3.1bps at 163.1bps / Spanish down 0.9bps at 96.3bps