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EGBs-GILTS CASH CLOSE: UK Short End Yields Fall Hard Despite High CPI

BONDS

Global FI rallied in the European afternoon Wednesday, despite strong US retail sales and industrial production data.

  • There was a little more attention on geopolitics once again (renewed concerns that Russia-Ukraine was not de-escalating) and the sense that plenty of central bank hawkishness is already priced in.
  • On that note, UK short end yields collapsed over the session alongside a rate strip rally. This was despite a higher-than-expected UK CPI reading and suggests that BoE hikes were richly priced.
  • GGBs didn't move on a BBG story that the ECB was working on a plan to extend their refinancing collateral status through 2024 - appeared priced in already.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is down 1.7bps at -0.364%, 5-Yr is down 1.3bps at 0.042%, 10-Yr is down 3.2bps at 0.276%, and 30-Yr is down 1.6bps at 0.535%.
  • UK: The 2-Yr yield is down 13bps at 1.407%, 5-Yr is down 10.8bps at 1.418%, 10-Yr is down 5.8bps at 1.524%, and 30-Yr is down 2.1bps at 1.588%.
  • Italian BTP spread down 1.5bps at 163.4bps / Spanish down 0.2bps at 99.6bps
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