EGBs-GILTS CASH CLOSE: US Leads Yields Lower Ahead Of Eurozone Inflation

European yields fell Tuesday as a senior Federal Reserve official appeared to open the door to US rate cuts in 2024.

• Global core FI rallied sharply in the European afternoon, led by US Treasuries after Fed Governor Waller said that three to five more months of lower inflation readings could prompt rate cuts.
• Prior to that it had been a constructive session with some support lent variously by softer oil prices, soft Eurozone lending figures, and an uptick in Israel-Hamas tensions.
• On the day, the UK curve bull flattened, with Germany's bull steepening. Gilts underperformed, with hawkish-leaning comments by BoE's Haskel and Ramsden potentially weighing. ECB's Lane speaks after the close.
• Periphery EGB spreads widened modestly, with ECB President Lagarde's comments Monday pointing to a near-term reconsideration of PEPP reinvestment in the not-too-distant future.
• The European schedule picks up pace the next couple of days. Most notable is the November round of monthly flash Eurozone inflation beginning Wednesday, with Spain and Germany reporting, ahead of the Eurozone-wide figures Thursday. (MNI's preview went out today).
• German fiscal policy will be another focus, with the ruling coalition reportedly meeting Weds to discuss the 2024 budget.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 8.1bps at 2.918%, 5-Yr is down 6.8bps at 2.447%, 10-Yr is down 5.1bps at 2.497%, and 30-Yr is down 2.5bps at 2.727%.
• UK: The 2-Yr yield is down 1.1bps at 4.632%, 5-Yr is down 4.2bps at 4.212%, 10-Yr is down 3.8bps at 4.174%, and 30-Yr is down 2bps at 4.645%.
• Italian BTP spread up 2.1bps at 175.7bps / Spanish up 1.1bps at 100.3bps