EGBs-GILTS CASH CLOSE: Robust US Data Sees Bund/Gilt Yields Jump

European yields jumped Thursday after strong US economic data cast fresh doubt on the global rate cut narrative.

• The session started in relatively subdued fashion, with modest overnight weakness in futures, interrupted by a slight uptick after a broadly in-line UK GDP release with softer underlying details.
• The Assumption Day holiday limited EGB trading volumes.
• But Bunds and Gilts turned sharply lower in early afternoon trade on stronger-than-expected US retail sales and jobless claims data, pushing yields higher across the curves and reducing 2024 implied ECB/BoE rate cuts by a few basis points.
• The German curve bear flattened, with the UK's more mixed with underperformance in the belly. Periphery EGB spreads tightened slightly on the day, as equities rallied (Eurostoxx futures +2%).
• A busy week in UK data concludes Friday with Retail Sales, while the Eurozone calendar remains light.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 10.6bps at 2.46%, 5-Yr is up 10.3bps at 2.195%, 10-Yr is up 8.3bps at 2.263%, and 30-Yr is up 5.9bps at 2.482%.
• UK: The 2-Yr yield is up 8.7bps at 3.653%, 5-Yr is up 10.1bps at 3.718%, 10-Yr is up 9.8bps at 3.923%, and 30-Yr is up 7.8bps at 4.48%.
• Italian BTP spread down 1.5bps at 136.9bps / Spanish down 1.3bps at 82.7bps