EGBs-GILTS CASH CLOSE: Short-End Gilts Rally As BoE QT Begins

Short-end Gilt yields fell sharply Tuesday in a bull steepening move on the UK curve. The German curve twist flattened, with periphery spreads slightly tighter.

• Yields fell sharply across the board on the open, but reversed from session lows after midday when a high US job openings figure dealt a late hawkish twist to Wednesday's Fed decision.
• German yields sustained their rise, though Gilts rallied toward the close after the BoE sold short-dated instruments in its first QT operation.
• All attention turns to the Fed decision Wednesday, though one eye remains on the BoE (and its likely 75bp hike) Thursday - our preview ("Downside Risks To 75bp") went out this afternoon.

CLOSING YIELDS / 10-YR PERIPHERY EGB SPREADS TO GERMANY:

• Germany: The 2-Yr yield is up 0.5bps at 1.941%, 5-Yr is down 2.2bps at 1.983%, 10-Yr is down 1.1bps at 2.131%, and 30-Yr is up 0.5bps at 2.14%.
• UK: The 2-Yr yield is down 14.8bps at 3.185%, 5-Yr is down 12.7bps at 3.504%, 10-Yr is down 4.6bps at 3.47%, and 30-Yr is down 2.2bps at 3.586%.
• Italian BTP spread down 2.7bps at 213.1bps / Spanish down 0.1bps at 108.2bps