EGBs-GILTS CASH CLOSE: USTs Drag Bunds And Gilts Off Highs

Early gains in the European space reversed sharply in the afternoon on US factors: US ISM Services hit a record high in July, and Fed's Clarida said he saw conditions in place for a 2023 Fed hike.

• Early in the session, European FI rallied as ECB's Kazaks said a decision on PEPP's future in September would be "premature". Later in the session, MNI published a sources story noting that a decision is not expected until later in the autumn at the earliest.
• This led German 10Y yields to lowest levels since early Feb (through -0.50%), but this reversed on the US headlines. Bunds ended up outperforming though, with yields edging lower into the close.
• Spanish and Italian Services PMIs both disappointed. Eurozone final PMI was revised lower from flash but UK's was revised higher.
• Thursday's focus is the BoE decision - our preview went out earlier today.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1bps at -0.781%, 5-Yr is down 2bps at -0.768%, 10-Yr is down 1.9bps at -0.501%, and 30-Yr is down 2.9bps at -0.04%.
• UK: The 2-Yr yield is up 0.6bps at 0.063%, 5-Yr is down 0.6bps at 0.224%, 10-Yr is down 0.8bps at 0.512%, and 30-Yr is down 1.3bps at 0.933%.
• Italian BTP spread up 0.6bps at 105.4bps / Spanish up 1.6bps at 73.1bps