EGBs-GILTS CASH CLOSE: Terminal ECB Pricing Ticks Higher On Knot

European curves steepened Wednesday with Gilts outperforming Bunds.

• Fair bit of ECB commentary today, highlighted by MNI's event with Klaas Knot who said a 50bp hike was possible in May (as well as March) pending inflation developments. Kazaks called for "significantly" restrictive rates while de Guindos wouldn't rule out further hikes past March.
• ECB cumulative hike pricing picked up about 3bp following the release of Knot's prepared text, though that faded; ECB and BoE terminal rates are now seen about 1bp higher than they began the day.
• Eurozone swap spreads continued to tighten following yesterday's ECB sovereign deposit renumeration announcement.
• Limited data out today, with more attention on the delayed German CPI readings out Thursday: see MNI's analysis here (1), here (2), and here (3)).
• Thu morning also sees the Riksbank decision and comments from BoE's Bailey.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.8bps at 2.717%, 5-Yr is down 0.6bps at 2.368%, 10-Yr is up 1.4bps at 2.363%, and 30-Yr is up 1.9bps at 2.334%.
• UK: The 2-Yr yield is down 4.4bps at 3.468%, 5-Yr is down 3.2bps at 3.185%, 10-Yr is down 0.4bps at 3.313%, and 30-Yr is up 1.8bps at 3.769%.
• Italian BTP spread down 1.3bps at 186.7bps / Spanish up 0.6bps at 94.1bps