BONDS: EGBs-GILTS CASH CLOSE: Long-End UK Rout Continues

MEF has announced it will be looking to sell the following BTPs at its auction this Thursday, December 12:

• E2.5-3.0bln of the 2.70% Oct-27 BTP (ISIN: IT0005622128)
• E2.5-3.0bln of the 3.15% Nov-31 BTP (ISIN: IT0005619546)
• E1.0-1.5bln of the 3.35% Mar-35 BTP (ISIN: IT0005358806)
• E0.75-1.0bln of the 4.30% Oct-54 BTP (ISIN: IT0005611741)

European yields were little changed Monday, with the ECB's final decision of the year coming into view.

• Core FI futures softened to start the week's trade, pressured by a risk-positive cross-asset move following a dovish monetary policy stance tweak in China.
• Bunds and Gilts regained ground over the course of the late morning and early afternoon, as European equity and crude oil futures retraced from session highs, but the weakness resumed in the last couple of hours of cash trade with yields closing near the session highs.
• There was no discernable market reaction to an appearance by BoE’s Ramsden, who did not discuss policy rates; he said he wants QT to be "gradual and predictable".
• The German and UK curves each twist steepened, with Bunds modestly underperforming Gilts.
• Periphery/semi-core EGB trade largely mirrored the moves in core markets, with spreads compressing on the day but finishing off tightest levels amid a bit of weakness toward the cash close.
• The week's focus is Thursday's ECB decision (pricing was unchanged  Monday, at 27bp of cuts implied), but Wednesday's US CPI release and Friday's UK economic activity data will also bear watching.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.3bps at 1.998%, 5-Yr is up 0.9bps at 1.978%, 10-Yr is up 1.3bps at 2.121%, and 30-Yr is up 3.2bps at 2.348%.
• UK: The 2-Yr yield is down 1.4bps at 4.247%, 5-Yr is down 1.4bps at 4.119%, 10-Yr is down 0.5bps at 4.27%, and 30-Yr is up 1.6bps at 4.824%.
• Italian BTP spread down 0.8bps at 107.7bps / French OAT down 1.4bps at 75.4bps  
   

Following are the Instant Answers for the Bank of Canada interest-rate decision due Wed at 945am EST:

• Overnight Rate Target (level in x.xx%)
• Does the Bank say it’s reasonable to expect further rate cuts?
• Does the Bank say monetary policy is nearing or in the neutral range?
• Does the Bank signal it may slow quantitative tightening?
• Does the Bank say there’s a risk that inflation undershoots the target?