EGBs-GILTS CASH CLOSE: Strong US Job Gains Seal Weekly Losses

European curves bear steepened Friday, with strong US payrolls data exacerbating weakness already evident earlier in the session.

• While global core FI was bid overnight on Israel-Iran tensions, Gilts and Bunds began retracing in morning European trade as the geopolitical risk premium faded.
• Stronger-than-expected US job gains alongside robust hourly earnings triggered a sharp sell-off in Treasuries that spilled over into Europe.
• Bunds outperformed Gilts, while EGB periphery spreads finished slightly wider of Bunds.
• 10Y Gilts saw their biggest weekly yield rise since early February (+13.6bp), while Bund yields were up 10.1bp on the week.
• In data, German factory orders were very weak, with industrial production mixed across France (soft) and Spain (strong). Meanwhile Eurozone retail sales posted a negative Y/Y outturn for the 17th consecutive month.
• Next week, the ECB meeting will take centre stage - with the communications ahead of the presumptive June rate cut decision looming large. MNI's Policy Team cited Eurosystem sources portraying an ECB divided over guidance as it nears the first cut.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.2bps at 2.875%, 5-Yr is up 2.5bps at 2.39%, 10-Yr is up 3.8bps at 2.399%, and 30-Yr is up 3.9bps at 2.57%.
• UK: The 2-Yr yield is up 3.8bps at 4.224%, 5-Yr is up 4.4bps at 3.923%, 10-Yr is up 4.8bps at 4.069%, and 30-Yr is up 4.5bps at 4.577%.
• Italian BTP spread up 3.3bps at 141.8bps / Spanish up 0.6bps at 83.5bps