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EGBs-GILTS CASH CLOSE: Reprieve For Peripheries

BONDS

Periphery EGB spreads narrowed Tuesday, reversing widening earlier in the session (though BTPs underperformed once again). Bunds and Gilts closed weaker with some bear steepening.

  • UK sold GBP5.5bln of Gilts; Germany allotted E4.8bln of Schatz (lowest bid-to-cover since Mar 2020); EU syndicated E14.1bln of 8Yr/25Yr SURE.
  • U.K. labour market data came in better than expected, while Eurozone 1Q flash GDP confirmed the prelim reading. BOE's Bailey said QE unwind should be operated "automatically".
  • Looking ahead to Wednesday, data includes UK Apr inflation. In supply, UK sells GBP2.5bln of Gilt, Germany E4bln of Bund, and EFSF E1bln. Speakers include ECB's Panetta, Rehn, de Cos, and Lane, while ECB also publishes its Financial Stability Review.

Closing yields/10-Yr Spreads to Bunds:

  • Germany: The 2-Yr yield is up 1.1bps at -0.644%, 5-Yr is up 0.5bps at -0.505%, 10-Yr is up 1.2bps at -0.103%, and 30-Yr is up 1.8bps at 0.464%.
  • UK: The 2-Yr yield is up 0.4bps at 0.088%, 5-Yr is down 0.1bps at 0.385%, 10-Yr is up 0.3bps at 0.868%, and 30-Yr is up 1.6bps at 1.417%.
  • Italian BTP spread down 0.9bps at 121.1bps / Spanish spread down 2.5bps at 70.5bps
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