EGBs-GILTS CASH CLOSE: Soft US Jobs Growth Triggers Bull Flattening

European curves bull flattened Friday, with yields pulling back from recent extremes after US employment data was seen to be on the soft side.

• An early upside surprise in German factory orders helped extend the bearish tone of the previous two sessions (which had centred around US Treasury supply expectations), but the space rallied in the early afternoon after US nonfarm payroll growth came in below expectations.
• The standout moves were in the UK curve with yields down by high-single digits in a bull flattening move; the German curve moved accordingly but with a less pronounced yield drop.
• Commentary by BoE Pill didn't move the needle, with the Chief Economist reiterating that rates are not on a pre-set course.
• Greek spreads outperformed a broader periphery rally, with DBRS Morningstar noting that Greece is close to receiving investment grade status, while Scope Ratings' reviews the sovereign after market close today.
• Next week is a quieter one on the European calendar, with Monday's highlights including German industrial production data and another appearance by BoE's Pill.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.1bps at 3.014%, 5-Yr is down 2.3bps at 2.581%, 10-Yr is down 4.3bps at 2.562%, and 30-Yr is down 6.3bps at 2.624%.
• UK: The 2-Yr yield is down 6bps at 4.92%, 5-Yr is down 6.7bps at 4.402%, 10-Yr is down 9bps at 4.38%, and 30-Yr is down 8.6bps at 4.569%.
• Italian BTP spread down 1.9bps at 165bps / Greek down 4.7bps at 122.6bps