EGBs-GILTS CASH CLOSE: Yields Reverse Higher, But Weekly Gains Hold

Bund and Gilt yields bounced from early session lows to finish mostly higher on the session Friday, but still lower on the week (10Y Gilt down 10bp, Bund 4bp).

• The UK and German curves flattened, with 5Y Gilts and 2Y Schatz underperforming on each, respectively. Yields pushed through the session highs toward the cash close, completing the reversal from the morning's intraday lows (10Y Bund up 7+bp and Gilt 10+bp from lows).
  
• There was no evident fundamental driver of the morning reversal, though notably ECB terminal hike pricing bounced from session lows as well (last +143bp in further hikes priced vs this morning's low below +137bp), suggesting perhaps the dovish rally in the past couple of days may have gone a little too far for now. The stronger-than-expected UK Nov GDP data out this morning helped set a cautious tone as well.
  
• Combined with BTP spreads re-widening after touching a fresh post-April 2022 low, it certainly had the feel of a profit-taking session.
• January's round of TLTRO repayments was not a market mover, with very limited (E62.7bln) takeup vs expectations.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.4bps at 2.593%, 5-Yr is up 2.3bps at 2.202%, 10-Yr is up 0.9bps at 2.168%, and 30-Yr is up 2.5bps at 2.134%.
• UK: The 2-Yr yield is up 5.1bps at 3.489%, 5-Yr is up 6.6bps at 3.305%, 10-Yr is up 3.2bps at 3.366%, and 30-Yr is up 3bps at 3.724%.
• Italian BTP spread up 0.2bps at 184.3bps / Spanish up 1.2bps at 99.8bps