EGBs-GILTS CASH CLOSE: Taking Off Risk Ahead Of The Weekend

Core European FI enjoyed a constructive session to end the week, with the short-end/belly of the German and UK curves outperforming in a flattening move. A few factors supported the risk-off core FI Friday, particularly in the afternoon.

• These included: the spectre of Covid restrictions returning (Netherlands expected to announce a 3-week lockdown after the close), geopolitical tensions (Ukraine/Russia and Belarus/E.U.), and a very weak UMichigan consumer sentiment figure led US Tsys to day's highs, dragging Europe.
• Meanwhile, periphery EGB spreads widened slightly, with Greece underperforming.
• After the close we get ratings reviews including Fitch on Portugal and S&P on the Netherlands.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.9bps at -0.742%, 5-Yr is down 4.9bps at -0.565%, 10-Yr is down 2.6bps at -0.257%, and 30-Yr is down 1.2bps at 0.061%.
• UK: The 2-Yr yield is down 3.9bps at 0.526%, 5-Yr is down 3.2bps at 0.673%, 10-Yr is down 0.7bps at 0.913%, and 30-Yr is up 1.1bps at 1.071%.
• Italian BTP spread up 1.8bps at 121.1bps / Greek up 3.9bps at 147.7bps