EGBs-GILTS CASH CLOSE: Yields Close Off Highs, But ECB Hawks Take Toll

European yields fell back from double-digit basis point rises seen earlier in the session, but remained sharply higher for the second consecutive session as ECB hawkishness continued to be digested.

• Yields continued rising through the morning as ECB hawks reinforced Thursday's message (Holzmann, Rehn) and mostly encouraging prelim PMI data, though fell back in the afternoon, partly after a very weak US PMI print.
• The German curve bear steepened, while the UK's bear flattened.
• Tracking a rise (and end-of-day pullback) in ECB terminal rates which soared to 3.40% vs 3% prior to the ECB meeting, periphery spreads continued widening but pulled back from the session's widest levels.
• Monday's schedule includes German IFO data and appearances by ECB's de Guindos and Simkus.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.8bps at 2.425%, 5-Yr is up 6bps at 2.22%, 10-Yr is up 6.9bps at 2.152%, and 30-Yr is up 9.7bps at 1.987%.
• UK: The 2-Yr yield is up 9.1bps at 3.487%, 5-Yr is up 7.7bps at 3.308%, 10-Yr is up 8.5bps at 3.329%, and 30-Yr is up 2.3bps at 3.672%.
• Italian BTP spread up 6.2bps at 214.5bps / Greek up 7.1bps at 216.6bps