EGBs-GILTS CASH CLOSE: Soft US Data Spurs First Yield Pullback This Week

European yields pulled back Thursday for the first time this week, with equities setting a risk-off tone and US data disappointing.

• An early move higher in Bunds on soft PPI and French confidence data reversed. And despite a multitude of ECB speakers and the March meeting accounts release, they conveyed little surprise and had limited market impact.
• Instead, core yields took their cue over most of the session from equity struggles (particularly in the auto sector) and a weak US Philly Fed reading.
• After underperforming in a bear flattening move Wednesday, the UK curve reversed, outperforming Germany with bull steepening.
• Terminal BoE and ECB rates pulled back by around 4bp, the largest decline in a week (though 25bp hikes remain fully priced for May).
• Periphery EGB spreads widened modestly.
• Friday's schedule is highlighted by prelim PMIs and UK retail sales.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 7.5bps at 2.893%, 5-Yr is down 7.6bps at 2.49%, 10-Yr is down 7bps at 2.445%, and 30-Yr is down 4.7bps at 2.505%.
• UK: The 2-Yr yield is down 10.1bps at 3.729%, 5-Yr is down 8.9bps at 3.627%, 10-Yr is down 9bps at 3.766%, and 30-Yr is down 7.9bps at 4.104%.
• Italian BTP spread up 2.1bps at 186.9bps / Spanish up 1bps at 103.8bps