EGBs-GILTS CASH CLOSE: Weakness Continues As Supply Weighs Again

UK and German yields rose for a second consecutive session Tuesday, with Gilts underperforming Bunds.

• Supply was again the theme, capping nascent gains throughout the morning, with early trade subdued and well within prior sessions' ranges.
• Hedging activity associated with EGB syndications (Slovenia 10Y for E3bln, France 30Y for E8bln, both on the high end of expectations) priced by early afternoon saw Gilts and Bunds head to session lows, recovering only briefly as US consumer confidence data came in weaker than expected.
• BoE's Ramsden gave away little on his monetary policy outlook in a speech today ("looking for more evidence about how entrenched [key indicators of inflation] persistence will be and therefore about how long the current level of Bank Rate will need to be maintained"
• Yields closed on the highs (10Y Gilts at the highest closing yield since late November). The German curve finished bear steeper, with the UK's bear flattening. Periphery spreads closed mixed, with BTPs and GGBs outperforming with modest tightening to Bunds, and Spanish/Portuguese spreads unchanged.
• Wednesday's schedule includes Eurozone confidence data, with central bank appearances including ECB's Muller and BOE's Mann. The focus remains on Euro inflation Thursday and Friday, however.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.4bps at 2.928%, 5-Yr is up 1.9bps at 2.472%, 10-Yr is up 2.4bps at 2.464%, and 30-Yr is up 3.3bps at 2.607%.
• UK: The 2-Yr yield is up 3.7bps at 4.349%, 5-Yr is up 3.8bps at 4.082%, 10-Yr is up 3.4bps at 4.196%, and 30-Yr is up 2.1bps at 4.658%.
• Italian BTP spread down 1.4bps at 143.8bps / Spanish down 0.1bps at 89.2bps