EGBs-GILTS CASH CLOSE: US-Driven Selloff Continues

Carrying on from last week's theme, upside surprises in US data saw German and UK yields rise sharply Monday.

• German /UK 10Y yields are up 16.7bp/26.2bp respectively in the past two sessions.
• The sell-off has been largely driven by the strong US payrolls Friday and today's upside surprise in US ISM Services price/activity metrics, along with hawkishly-perceived comments by Federal Reserve officials.
• European data was inconsequential, with final Europe Services PMIs in line with final.
• The German curve closed bear steeper with the UK's fairly flat, with 2Y through 10Y yields up in parallel by around 9bp.
• Periphery EGB spreads fell marginally, mostly mirroring the uptick in Eurozone equities as the euro fell against the USD.
• The early highlight Tuesday is German factory orders.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 4.4bps at 2.613%, 5-Yr is up 7.1bps at 2.237%, 10-Yr is up 7.5bps at 2.316%, and 30-Yr is up 8.1bps at 2.52%.
• UK: The 2-Yr yield is up 8.8bps at 4.509%, 5-Yr is up 8.9bps at 3.998%, 10-Yr is up 8.9bps at 4.007%, and 30-Yr is up 6.5bps at 4.617%.
• Italian BTP spread down 0.7bps at 156.8bps / Spanish down 1.5bps at 91.2bps