EGBs-GILTS CASH CLOSE: Recessionary Rally Resumes

Global recession fears put EGB and Gilt yields on the back foot once again Tuesday, with the short-end/bellies of curves rallying in a bull-steepening move.

• Most economic fears centred around Eurozone energy supplies, with headlines from Norway to Germany suggesting little relief from the current crisis and its negative economic implications.
• Against that backdrop, Gilts outperformed Bunds, with the Euro falling to 20Y lows vs USD.
• Volumes were not particularly elevated given the level of volatility.
• Periphery spreads widened amid a sharp sell-off in equities, and an MNI Interview highlighting potential German opposition to prospective ECB periphery bond-buying plans ("Flexible ECB Bond Buys Risk Breaking German Law").

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

• Germany: The 2-Yr yield is down 18.6bps at 0.432%, 5-Yr is down 17.4bps at 0.87%, 10-Yr is down 15.4bps at 1.179%, and 30-Yr is down 13.9bps at 1.497%.
• UK: The 2-Yr yield is down 12.2bps at 1.683%, 5-Yr is down 14.2bps at 1.712%, 10-Yr is down 14.7bps at 2.049%, and 30-Yr is down 10.3bps at 2.464%.
• Italian BTP spread up 6.5bps at 197.7bps / Spanish up 3.2bps at 110.7bps