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EGBs-GILTS CASH CLOSE: Risk-Off Rally Led By Short End

BONDS

The UK and German curves bull steepened Monday as equities weakened sharply, while periphery spreads widened in a broad-based risk-off move.

  • This marked a reversal of an initial yield rise just after the open, with the European bond rally accelerating as the US entered the fray in the afternoon.
  • Fairly quiet on the data/speaker front, with BoE's Saunders the highlight, saying his hike choice was between 25 and 50bp, not 75bp.
  • BTP and GGB spreads jumped at the open but steadied thereafter, though respective 10Ys ended at new post-May 2020 wides to Bunds.

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

  • Germany: The 2-Yr yield is down 8.9bps at 0.231%, 5-Yr is down 8.2bps at 0.769%, 10-Yr is down 3.7bps at 1.095%, and 30-Yr is down 0.5bps at 1.236%.
  • UK: The 2-Yr yield is down 11.3bps at 1.393%, 5-Yr is down 8.2bps at 1.578%, 10-Yr is down 4bps at 1.955%, and 30-Yr is down 1.4bps at 2.159%.
  • Italian BTP spread up 4.9bps at 205.3bps / Greek up 8.7bps at 253.1bps

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