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The UK and German curves bull flattened Wednesday with periphery spreads slightly wider, ahead of the US Federal Reserve decision after hours.

  • UK inflation data came out on the high side (2.1% Y/Y in May vs 1.8% consensus), but breakevens actually headed lower over the day after the initial jump (in a move similar to the US inflation data shockers in Apr and May).
  • Bond supply came from the UK (Gilts, GBP2.5bn) and Germany (Bunds, EUR4.085bn allotted). Italy also conducted a tap issuance for specialists (E1.5B total).

Closing German/UK Yields And 10-Yr Spreads To Germany

  • Germany: The 2-Yr yield is down 0.5bps at -0.677%, 5-Yr is down 1.6bps at -0.619%, 10-Yr is down 1.8bps at -0.25%, and 30-Yr is down 1.7bps at 0.305%.
  • UK: The 2-Yr yield is down 0.3bps at 0.077%, 5-Yr is down 0.6bps at 0.325%, 10-Yr is down 1.9bps at 0.739%, and 30-Yr is down 1.9bps at 1.257%.
  • Italian BTP spread up 0.8bps at 102.8bps/ Spanish spread up 0.6bps at 64.7bps