EGBs-GILTS CASH CLOSE: Yields End Week/Month/Quarter Higher

Bunds outperformed Gilts Friday, with periphery EGBs trading mixed, and core FI yields ending the week (and month and quarter) higher overall.

• Yields rose early in the session with no specific catalysts evident, though the week's generally hawkish central bank rhetoric continued to weigh ahead of month-end dynamics.
• There was basically no reaction to the Eurozone's June flash inflation print which was well priced on prior national inflation readings (including a softer-than-expected France number).
• However, with core and services inflation remaining sticky, the ECB remains on course to hike at the next two meetings (our review is here). And as MNI reported citing Eurosystem sources, the Governing Council must see the slew of data through early September before deciding its move at that juncture.
• Yields descended in the afternoon though after US PCE inflation and MNI Chicago PMI came in on the soft side of expectations.
• The German curve ended bull flatter, with the UK's bear flattening.
• Next week begins fairly quietly (with a US holiday on Tuesday and early market close Monday), with the US employment report Friday the focus.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is unchanged at 3.196%, 5-Yr is down 1.8bps at 2.55%, 10-Yr is down 2.4bps at 2.392%, and 30-Yr is down 3.8bps at 2.389%.
• UK: The 2-Yr yield is up 4.6bps at 5.274%, 5-Yr is up 3.9bps at 4.663%, 10-Yr is up 0.6bps at 4.388%, and 30-Yr is down 1bps at 4.423%.
• Italian BTP spread down 0.3bps at 168bps / Greek up 1.3bps at 127.9bps