EGBs-GILTS CASH CLOSE: Italy Rallies As Market Awaits Fed, BoE

Bunds and Gilts strengthened slightly Wednesday, in a largely noncommittal session for European FI ahead of the Federal Reserve decision in the evening and the Bank of England Thursday.

• Italy was the standout performer, with 10Y spreads falling through the 100bp mark vs Germany to the tightest level since April on headlines that Italy would skip selling debt via syndication this autumn (though as MNI pointed out, it's unclear why this was a major surprise).
• ECB's Muller noted that the central bank could boost regular QE purchases after PEPP concludes, though later clarified "I am not sure if increasing the volume of APP purchases in the spring is the best way to avoid a cliff effect."
• Apart from BoE Thursday, flash PMIs will be in focus.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.1bps at -0.711%, 5-Yr is down 0.1bps at -0.634%, 10-Yr is down 0.7bps at -0.324%, and 30-Yr is down 0.8bps at 0.165%.
• UK: The 2-Yr yield is unchanged at 0.279%, 5-Yr is down 0.3bps at 0.482%, 10-Yr is down 0.8bps at 0.799%, and 30-Yr is down 0.1bps at 1.118%.
• Italian BTP spread down 2.5bps at 98.8bps / Spanish ad down 0.6bps at 63.6bps