EGBs-GILTS CASH CLOSE: Taking The Lead From US Tsys

Core European FI was in thrall to movements in US Treasuries, which in turn sold off on continued speculation that fiscal stimulus will be delivered soon.

• Risk appetite was certainly positive after an uncertain start to the European session, with equities higher, peripheral spreads tighter (esp Greece), and the UK / German curves bear steepening.
• Mixed Services PMI data for Spain/Italy largely shrugged off over the course of the morning.
• Generally, Eurozone PMIs have shown a mixed bag (Germany was revised up from under 50.0 to above), but generally showing signs that COVID is impairing the econ recovery.

Closing levels:

• Germany: The 2-Yr yield is up 0.9bps at -0.7%, 5-Yr is up 1.9bps at -0.706%, 10-Yr is up 2.6bps at -0.51%, and 30-Yr is up 2.5bps at -0.078%.
• UK: The 2-Yr yield is up 1.6bps at -0.021%, 5-Yr is up 2.6bps at -0.034%, 10-Yr is up 4.2bps at 0.288%, and 30-Yr is up 5.1bps at 0.869%.

10-Yr Periphery EGB Spreads:

• Italian BTP spread down 0.2bps at 131.8bps
• Spanish bond spread up 1.4bps at 77.1bps
• Portuguese PGB spread down 0.1bps at 75.5bps
• Greek bond spread down 3.3bps at 149bps