BONDS: EGBs-GILTS CASH CLOSE: Core FI Gains On Tariff And Growth Concerns

European yields fell sharply Friday, with tariff concerns weighing on risk appetite and Eurozone inflation data coming in on the low side.

• French and Spanish flash March inflation readings were softer than expected, resulting in Bunds hitting what would be their richest levels of the session.
• The rest of the day proved more mixed, with tariff headlines again the main driver. Core FI pulled back on reports that the EU was considering some trade concessions to the US, and later on positive US-Canada trade tones.
• But risk aversion would pick up again toward the cash close, with equities falling to 2-week lows on poor US consumption data and Atlanta Fed GDP nowcast, as well as Trump confirming that the US would follow through on tariffs to Canada.
• On the day, Gilts outperformed Bunds, with bellies outperforming in both the German and UK curves.
• For the week, both the UK (2s10s +5.2bp) and German (2s10s +7.4bp) bull steepened.
• Periphery EGB spreads widened alongside the equity drawdown, with BTPs underperforming.
• Next week's early highlights include German and Italian inflation, with Wednesday's US tariff announcements in focus globally. 

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 4.9bps at 2.02%, 5-Yr is down 5.3bps at 2.32%, 10-Yr is down 4.6bps at 2.727%, and 30-Yr is down 3.2bps at 3.102%.
• UK: The 2-Yr yield is down 7.8bps at 4.195%, 5-Yr is down 9.4bps at 4.298%, 10-Yr is down 8.9bps at 4.694%, and 30-Yr is down 8bps at 5.288%.
• Italian BTP spread up 1.6bps at 112.2bps / Spanish up 1bps at 63.3bps