EGBs-GILTS CASH CLOSE: Recession Trade Resumes

Bund and Gilt yields fell to start the week, as the familiar themes of recession fears (and US dollar strength) were prevalent.

• Monday's strength was enough to largely reverse Friday's sell-off following the US jobs report, with concerns over global recession resuming (China Covid lockdowns and Russia-Eurozone gas dispute the proximate causes).
• Otherwise, it was a relatively quiet session for European fixed income despite the advance, with EUR/USD nearing parity taking the headlines, and little in the way of speakers or impactful data.
• Bobl outperformed on the German curve, with the UK belly also outperforming.
• Periphery EGB spreads tightened intraday but finished a little wider.

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

• Germany: The 2-Yr yield is down 8.5bps at 0.442%, 5-Yr is down 10.1bps at 0.865%, 10-Yr is down 9.9bps at 1.246%, and 30-Yr is down 7.2bps at 1.537%.
• UK: The 2-Yr yield is down 5bps at 1.88%, 5-Yr is down 5.6bps at 1.856%, 10-Yr is down 5.5bps at 2.178%, and 30-Yr is down 3.3bps at 2.602%.
• Italian BTP spread up 2.2bps at 196.6bps / Spanish up 1.7bps at 108.9bps