EGBs-GILTS CASH CLOSE: Steeper Curves Thursday As Early Losses Fade

The German and UK curves steepened Thursday, with Gilts outperforming and the short end and underperforming at the long end.

• Yield moves were relatively restrained by recent standards by the close, with initial losses reversing over the course of the day. The UK curve twist steepened, with Germany's bear steepening.
• Cash trade closed just as Federal Reserve Chair Powell delivered a speech seen as leaning dovish on the prospect of further tightening, which saw Bund and Gilt futures rally sharply to session's best levels.
• Periphery spreads closed tighter, led by BTPs, which reversed earlier widening.
• There were few evident macro / headline drivers for intraday moves, with data limited (French confidence data was slightly weak vs expectations).
• Friday's early highlight is UK retail sales data. Attention is turning to next week's ECB decision - note the pre-monetary policy meeting quiet period is underway.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.6bps at 3.205%, 5-Yr is up 0.7bps at 2.848%, 10-Yr is up 0.7bps at 2.931%, and 30-Yr is up 0.7bps at 3.104%.
• UK: The 2-Yr yield is down 2.1bps at 4.986%, 5-Yr is up 0.9bps at 4.709%, 10-Yr is up 1.6bps at 4.673%, and 30-Yr is up 3.4bps at 5.073%.
• Italian BTP spread down 4.3bps at 201.5bps / Spanish down 2.6bps at 110.7bps