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EGBs-GILTS CASH CLOSE: Steepening Fades Slightly On Afternoon Mini-Rally

BONDS

The Gilt and Bund curves bear steepened slightly Thursday, though came off steepest levels amid an afternoon mini-rally in longer-duration core European FI.

  • After tracking US Tsys closely throughout most of the session, Bunds decoupled in the last 1.5 hours of cash trade, retaining the move lower in yields as Tsy yields rebounded to session highs.
  • Periphery spreads compressed, with Italy 10s touching 100bps vs Germany.
  • BoE's Bailey added little new in his Mansion House speech today.
  • Data throughout the session brought little impact in either direction (Italy Mfg PMI in line, Spain beat), with focus still firmly on Friday's US nonfarm payrolls release.
  • Little data or supply, but multiple ECB speakers, including Lagarde.

Closing Yields / 10-Y Spread to Germany:

  • Germany: The 2-Yr yield is down 0.5bps at -0.667%, 5-Yr is down 0.1bps at -0.589%, 10-Yr is up 0.6bps at -0.201%, and 30-Yr is up 1.6bps at 0.306%.
  • UK: The 2-Yr yield is up 0.5bps at 0.068%, 5-Yr is up 0.5bps at 0.337%, 10-Yr is up 1.4bps at 0.73%, and 30-Yr is up 1.3bps at 1.247%.
  • Italian BTP spread down 2.2bps at 100.4bps / Spanish spread down 2bps at 59.9bps

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