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EGBs-GILTS CASH CLOSE: Post-US CPI Rally Fades, But BTPs Outperform

BONDS

The German curve bull steepened Wednesday with the UK twist flattening as a softer-than-expected US July inflation print pulled down global yields.

  • Rates retraced somewhat from session lows immediately after the US CPI release.
  • Overall though curves held their re-steepening (UK 2s10s finished above zero after inverting earlier in the session) and yields finished lower with the exception of the UK short-end.
  • BTPs outperformed on the more dovish central bank tightening outlook and risk-on tone, but bucking the broader trend were GGBs whose spreads widened for another session.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

  • Germany: The 2-Yr yield is down 5.9bps at 0.546%, 5-Yr is down 3.2bps at 0.656%, 10-Yr is down 3.3bps at 0.888%, and 30-Yr is down 2.7bps at 1.127%.
  • UK: The 2-Yr yield is up 2bps at 1.947%, 5-Yr is down 2bps at 1.8%, 10-Yr is down 2bps at 1.951%, and 30-Yr is down 0.9bps at 2.336%.
  • Italian BTP spread down 2.7bps at 211.3bps / Greek up 2.5bps at 230.8bps

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