EGBs-GILTS CASH CLOSE: Rally Into End-Of-Day

The UK short end outperformed Thursday with a sharp drop in BoE implied hike pricing, with bull steepening in the curve.

• Bund and Gilt futures hit the session's best levels just at the cash close alongside a sharp drop in oil prices on news of a potential US-Iran nuclear deal, though have faded a little since and remain well below Wednesday's pre-Bank of Canada hike levels.
• 5.5bp of hikes were removed from the BoE implied hiking path; 1.1bp for ECB's.
• German yields pared some of Wednesday's gains but didn't keep pace with Gilts; much of Europe was on holiday, thinning trade.
• Periphery spreads narrowed sharply following recent widening: the 4bp drop in Greek spreads was noticeable ahead of Friday's Fitch ratings review.
• Friday morning sees some Eurozone national industrial production readings.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.4bps at 2.894%, 5-Yr is down 5.4bps at 2.42%, 10-Yr is down 5.4bps at 2.402%, and 30-Yr is down 4.2bps at 2.562%.
• UK: The 2-Yr yield is down 7.2bps at 4.5%, 5-Yr is down 4.4bps at 4.212%, 10-Yr is down 1.8bps at 4.233%, and 30-Yr is down 1.3bps at 4.488%.
• Italian BTP spread down 4.3bps at 178.4bps / Greek down 3.9bps at 128.9bps