EGBs-GILTS CASH CLOSE: UK Curve Bull Steepens With Weds CPI Eyed

The UK curve bull steepened modestly Monday as BoE hike pricing pulled back, with the belly outperforming on the German curve.

• There was little in the way of impactful newsflow or data in the session, with Italian final inflation data in line. Overnight, soft Chinese GDP data spurred some risk-off moves, though a solid US Empire Manufacturing reading lent a slightly hawkish tone to afternoon trade.
• A quiet session kept Wednesday's crucial UK CPI reading in focus (MNI's Gilt Week Ahead is titled "Inflation, inflation, inflation".
• BoE terminal rate pricing reversed Friday's rise, dropping 9bp on the day, though high odds of an August 50bp hike vs 25bp raise remained steady at 75%.
• Periphery spreads widened slightly, with Greece a modest outperformer following solid primary budget figures for H1.
• Tuesday's docket is light, with ECB's Villeroy speaking, along with German Schatz and 2053 Gilt supply.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.1bps at 3.189%, 5-Yr is down 3.2bps at 2.579%, 10-Yr is down 3.2bps at 2.48%, and 30-Yr is down 2.7bps at 2.506%.
• UK: The 2-Yr yield is down 3.8bps at 5.168%, 5-Yr is down 3.1bps at 4.556%, 10-Yr is down 1.3bps at 4.431%, and 30-Yr is unchanged at 4.556%.
• Italian BTP spread up 1.5bps at 167.4bps / Greek up 0.7bps at 145.9bps