EGBs-GILTS CASH CLOSE: Yields Close Near The Highs

Core European FI retreated sharply Monday following last week's rally, with both the UK and German curves bear steepening.

• In a session light on data flow, fixed income markets appeared to reassess Friday's post-US employment gains, with steady losses throughout most of the day for both Bunds and Gilts.
• Yields closed on the highs as the US dollar regained ground and equities pulled back in the European afternoon, with 10Y Bund breaching Friday's pre-payrolls levels, with Gilt finishing just below.
• Periphery spreads widened, with BTPs underperforming - 10Y/Bund spreads erased the post-payrolls tightening and then some but closed about 0.5bp narrower vs last Friday's open.
• BoE's Pill said after the cash close that inflation may have fallen sharply below 5% in October (data's out next week).
• On the data front, Services PMIs were mixed (mostly Finals, little market reaction), while September German factory orders surprised to the upside, but the details and downward revisions made for a weak report ahead of Tuesday's industrial production data.
• Among other releases Tuesday we get Spanish industrial production data, along with an appearance by ECB's Nagel (who is also due to speak after hours Monday).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.2bps at 3.023%, 5-Yr is up 8.5bps at 2.627%, 10-Yr is up 9.4bps at 2.739%, and 30-Yr is up 8.7bps at 3.006%.
• UK: The 2-Yr yield is up 4.4bps at 4.721%, 5-Yr is up 6.5bps at 4.329%, 10-Yr is up 8.9bps at 4.377%, and 30-Yr is up 8bps at 4.852%.
• Italian BTP spread up 3.7bps at 190.5bps / Spanish up 1.9bps at 105.8bps