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EGBs-GILTS CASH CLOSE: Renewed Weakness On US CPI

BONDS

Gilts underperformed Bunds Thursday, with the 10Y segment weakest on both curves as markets digested yet another hawkish inflation surprise.

  • The global focal point of the session was the US January inflation report, and it delivered a sizeable upside surprise vs expectations that reversed modest earlier FI gains.
  • Periphery spreads also widened noticeably as the CPI report triggered renewed central bank tightening speculation; BTPs and GGBs traded at their widest to Bunds since mid-2020.
  • A quieter calendar Friday, with UK GDP taking focus early.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 1.8bps at -0.331%, 5-Yr is up 6.3bps at 0.083%, 10-Yr is up 7.2bps at 0.284%, and 30-Yr is up 4.7bps at 0.474%.
  • UK: The 2-Yr yield is up 8.1bps at 1.362%, 5-Yr is up 8.8bps at 1.409%, 10-Yr is up 9.4bps at 1.524%, and 30-Yr is up 8.3bps at 1.613%.
  • Italian BTP spread up 6.8bps at 160.7bps / Spanish up 3.5bps at 88.7bps

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