EGBs-GILTS CASH CLOSE: Yields End Week On Highs

European yields closed at one-month highs Friday, with markets taking a hawkish cue from US data.

• The German and UK curves bear flattened, with ECB and BoE terminal rate expectations pushing 6-7bp higher.
• A strong US UMichigan consumer inflation survey and hawkish comments by Fed's Waller exacerbated the global move.
• For the ECB, not only is a 25bp now fully priced in, but the debate is increasingly over whether they will go 50bp (30% priced).
• A Reuters sources piece and comments by Belgium's Wunsch set a hawkish tone by suggesting a more aggressive QT stance may be ahead.
• Periphery EGB spreads were mixed but basically flat, coming off wides in the afternoon as Bunds sold off.
• Next week sees huge EGB issuance (E45bln) and several key data points, including UK CPI and flash PMIs.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 10.2bps at 2.881%, 5-Yr is up 8.1bps at 2.473%, 10-Yr is up 6.8bps at 2.44%, and 30-Yr is up 4.5bps at 2.507%.
• UK: The 2-Yr yield is up 10.1bps at 3.618%, 5-Yr is up 10.2bps at 3.508%, 10-Yr is up 9.2bps at 3.667%, and 30-Yr is up 7.9bps at 4.021%.
• Italian BTP spread up 0.7bps at 185.7bps / Spanish down 0.8bps at 103.7bps