EGBs-GILTS CASH CLOSE: Strong Start To Week

Core European FI started the week on the front foot, with yields steadily dropping through the session and the German and UK curves bull flattening Monday.

• Bunds outperformed, supported in part the latest fiscal developments, as Fin Min Lindner confirming Germany wouldn't take on new net debt this year despite the supplementary budget.
• With the German cabinet agreeing to the 2023 supplementary budget today, attention turns to Chancellor Scholz addressing the Bundestag Tuesday morning on the fiscal situation.
• Soft US housing data and softer oil prices helped the core FI bid; other than that, there were few Europe-specific drivers in the session.
• It was a slightly less constructive story for periphery EGBs, after ECB President Lagarde mentioned that PEPP reinvestment would be reassessed in the "not-too-distant future".
• We get some speakers overnight including ECB's De Cos and BOE's Ramsden, with Haskel and Lane up Tuesday. Eurozone inflation is the week's focus, with the November flash round starting Wednesday - our preview will be out Tuesday.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 7.3bps at 2.999%, 5-Yr is down 10.1bps at 2.515%, 10-Yr is down 9.5bps at 2.548%, and 30-Yr is down 6.7bps at 2.752%.
• UK: The 2-Yr yield is down 6.8bps at 4.643%, 5-Yr is down 7.6bps at 4.254%, 10-Yr is down 7.1bps at 4.212%, and 30-Yr is down 8.1bps at 4.665%.
• Italian BTP spread down 1.9bps at 173.6bps/ Greek up 4.1bps at 123.2bps