EGBs-GILTS CASH CLOSE: Weak US Data Steals EZ Core CPI's Thunder

US data sparked a strong afternoon rally across EGBs and Gilts Friday.

• Bund futures hit session lows on the 1100CET Eurozone Dec inflation release which showed core inflation ticking higher, cementing pricing for a 50bp ECB hike in February.
  
• But shortly after, EGBs and Gilts bottomed and began a sustained intraday rally that accelerated in the afternoon on weaker-than-expected wage data in the US employment report, and on a contractionary US ISM Services reading that spurred recession talk.
• Curve bellies outperformed and periphery EGB spreads came off their wides as ECB tightening pricing faded.
• Looking ahead, BoE's Mann and Pill speak over the weekend, while Monday opens with German IP data (following today's weak factory orders print).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 7bps at 2.581%, 5-Yr is down 10bps at 2.251%, 10-Yr is down 10.6bps at 2.21%, and 30-Yr is down 10.7bps at 2.155%.
• UK: The 2-Yr yield is down 9.4bps at 3.438%, 5-Yr is down 10.8bps at 3.45%, 10-Yr is down 8.1bps at 3.472%, and 30-Yr is down 3.7bps at 3.871%.
• Italian BTP spread down 0.3bps at 201.5bps / Spanish unch at 105.8bps