BONDS: EGBs-GILTS CASH CLOSE: Curves Bear Steepen To End The Week

European curves bear steepened to close the week. 

• The overall price action for the session was set from the start, with light bear steepening seen on both the UK and German curves from early trade.
• There was little reaction to national-level August flash inflation data, which was generally seen as being on the soft side for headline but core measures were mixed.
• Likewise, US data in the European afternoon was largely in line with consensus, not bringing much reaction on either side of the Atlantic.
• The German and UK curves both bear steepened, with Bunds slightly underperforming Gilts. For the week, both the UK (2Y yield -0.1bp, 10Y +2.9bp) and German (2Y yield -0.8bp, 10Y +0.2bp) curves twist steepened.
• Periphery/semi-core EGB spreads widened, with OATs outperforming and closing the week below the 80bp mark, rising around 9bp for the week on political concerns but below the 81.8bp post-Jan closing high set Wednesday.
• Next week's scheduled highlights include the Eurozone-wide inflation reading, BOE Treasury committee testimony, final PMIs, UK retail sales, and German factory orders.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.6bps at 1.94%, 5-Yr is up 1.4bps at 2.257%, 10-Yr is up 2.9bps at 2.724%, and 30-Yr is up 3.8bps at 3.336%.
• UK: The 2-Yr yield is up 0.7bps at 3.943%, 5-Yr is up 0.6bps at 4.103%, 10-Yr is up 2.3bps at 4.722%, and 30-Yr is up 3bps at 5.6%.
• Italian BTP spread up 2.1bps at 86.3bps / French OAT up 0.7bps at 79.3bps