EGBs-GILTS CASH CLOSE: Semi-Core Suffers On BoJ Surprise

European curves steepened Tuesday after the Bank of Japan's surprise decision to raise the upper yield boundary of the 10Y JGB by 25bp.

• German and UK yields closed firmly higher (around double-digits basis points), with the exception of 2Y UK yields which were lower on the day.
• OATs underperformed, with 10Y wider by 2bp of Bunds to the widest close since Nov 1(56.5bp). Weaker Japanese demand post-BoJ decision was seen as a factor.
• Periphery spreads widened at the open but narrowed over the session as equities recovered alongside the US dollar softening.
• In data, German PPI and Eurozone consumer confidence were softer than expected, but there was little attention paid, with all eyes on the BoJ move.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 7.7bps at 2.517%, 5-Yr is up 9.4bps at 2.333%, 10-Yr is up 10.1bps at 2.304%, and 30-Yr is up 12.4bps at 2.187%.
• UK: The 2-Yr yield is down 0.4bps at 3.683%, 5-Yr is up 8.8bps at 3.579%, 10-Yr is up 9.4bps at 3.596%, and 30-Yr is up 6.8bps at 3.892%.
• Italian BTP spread down 0.7bps at 217.2bps / Spanish up 1.3bps at 110.1bps