EGBs-GILTS CASH CLOSE: Yields End Week On Flat Note

Bunds and Gilts surrendered early session strength by Friday's close, leaving yields relatively flat for the week.

• Core yields fell through the European morning, helped in large part by weaker oil prices diminishing inflation risk premia.
• But after bottoming out in early afternoon, Bund and Gilt yields turned higher as the week's cash trade reached a conclusion, closing the session near the highs.
• Contributing factors in the reversal included a rebound in oil and equities from session lows and stronger-than-expected US consumer sentiment data (UMichigan).
• The German curve bull steepened slightly on the day, with the UK's twist flattening.
• Periphery EGB spreads widened modestly.
• Next week's schedule includes August flash PMIs Thursday, with central bank speakers including BoE's Bailey and ECB's Lane appearing at the Fed's Jackson Hole symposium.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.7bps at 2.433%, 5-Yr is down 2.1bps at 2.174%, 10-Yr is down 1.6bps at 2.247%, and 30-Yr is down 1.5bps at 2.467%.
• UK: The 2-Yr yield is up 2.7bps at 3.68%, 5-Yr is up 1.8bps at 3.736%, 10-Yr is up 0.3bps at 3.926%, and 30-Yr is down 1.1bps at 4.469%.
• Italian BTP spread up 1.7bps at 138.6bps / Spanish up 1.6bps at 84.3bps