EGBs-GILTS CASH CLOSE: UK Case Surge And Some PEPP Talk

Gilts outperformed Monday, as the German and UK curves bull flattened. Periphery spreads tightened modestly as well.

• The UK recorded the highest number of COVID cases since January (22k+), though this surge largely appeared to be expected; Gilts gained all day, with 10s to 30 yields down 5+bps.
• The ECB taper debate widened, with hawks Weidmann and Holzmann calling for winding down PEPP earlier rather than later; dove Panetta said flexibility in purchases should be maintained. VP de Guindos said the ECB was mindful of second-round inflation effects.
  
• ECB weekly net PEPP purchases hit the highest in a year.
• Belgium sold E3.8bln of OLO; EU mandated banks for dual-tranche 5-/30Y NGEU, subject to be launched Tuesday.

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

• Germany: The 2-Yr yield is down 0.5bps at -0.652%, 5-Yr is down 2.3bps at -0.574%, 10-Yr is down 3.5bps at -0.19%, and 30-Yr is down 3.4bps at 0.311%.
• UK: The 2-Yr yield is down 2.7bps at 0.057%, 5-Yr is down 3.4bps at 0.341%, 10-Yr is down 5.6bps at 0.722%, and 30-Yr is down 6.6bps at 1.221%.
• Italian BTP spread down 1.5bps at 106.3bps / Spanish down 0.3bps at 63.2bps