US CREDIT SUPPLY: CIBC $Benchmark GUIDANCE

• US TSY 2Y AUCTION: NON-COMP BIDS $298 MLN FROM $69.000 BLN TOTAL

Cash EGBs picked up a late bid Monday, mitigating an earlier rise in yields.

• Core FI started off the session on the back foot in a continuation of last week's BOE/ECB-influenced price action. 10Y German yields briefly moved above 2.90% for the first time since March and were above that level just 15 minutes before the close.
• ECB's Schnabel told a FAZ podcast released Monday that "at the moment, no interest rate increase is to be expected in the foreseeable future... I didn’t say that interest rates should be raised...but rather that they shouldn’t be lowered again. That’s a very important distinction" (as quoted by Bloomberg).
• Those comments were interpreted as tempering hawkish perceptions of her remarks from earlier in the month when she said she was "rather comfortable" with the market's modestly-implied 2026 hikes. They made headlines just before the cash close, depressing EGB yields across the curve.
• Gilts twist steepened on the day, with a slight uptick in long-end yields carrying on from Friday's trade but remaining within the month's ranges. Final Q3 UK GDP data met expectations.
• Periphery / semi-core EGB spreads mostly closed wider of Bunds, though OAT spreads held in, with a French official expressing confidence that a 2026 budget will be agreed after negotiations resume in January.
• This week's schedule is thin due to upcoming holidays, with only 2nd tier data this side of Christmas.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.6bps at 2.148%, 5-Yr is down 0.3bps at 2.485%, 10-Yr is up 0.2bps at 2.897%, and 30-Yr is down 0.4bps at 3.532%.
• UK: The 2-Yr yield is down 0.8bps at 3.745%, 5-Yr is up 0.5bps at 3.976%, 10-Yr is up 1.2bps at 4.536%, and 30-Yr is up 1.6bps at 5.271%.
• Italian BTP spread up 1.2bps at 70.2bps / French OAT down 0.1bps at 71.5bps  

Tsy futures are holding a lower/narrow range, curves mildly flatter (2s10s -0.114 at 66.046) ahead of the $69B 2Y note auction (91282CPS5) at 1300ET, WI currently at 3.492% -- 0.3bp cheap to last months tail: 

• November recap: Tsy futures scaled off highs after the $69B 2Y note auction (91282CPL9) tailed slightly: 3.489% high yield vs. 3.487% WI; 2.68x bid-to-cover vs. 2.59x prior.
• Peripheral stats: Indirect take-up rose to 58.07% from 53.65% prior, directs up to 30.74% vs. 34.77% prior, primary dealer take-up 11.18% vs. 11.58% prior.