BONDS: EGBs-GILTS CASH CLOSE: US Inflation Rise Pushes European Yields Higher

European yields rose Wednesday with mixed dynamics across curves following a stronger-than-expected US inflation report.

• Supply weighed early on the space (30Y Oat syndication and Greek, German, Portuguese auctions), with weak Italian industrial production data not really having an impact. The biggest catalyst of the session was the US January CPI release that showed significant upside surprises in almost all important categories.
• Cumulative global central bank rate cut pricing for end-2025 was pared (ECB 77bp vs 83bp prior; BOE 59bp vs 61bp prior)
• BOE MPC member Greene made comments that seem to move her away from her former hawkish tilt, even if she's still considered unlikely to vote for a March cut.
• The relative performance in STIR meant the German curve bear flattened, with the UK's bear steepening.
• Periphery EGB spreads tightened however, with European equities bouncing toward the end of the session.
• Thursday's scheduled highlight is UK economic activity data, including Q4 GDP, while we also get some final Eurozone January inflation data and Eurozone aggregate industrial production. ECB's Cipollone and Nagel make appearances, with the ECB also publishing its economic bulletin.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.3bps at 2.137%, 5-Yr is up 5.5bps at 2.267%, 10-Yr is up 4.7bps at 2.477%, and 30-Yr is up 3.2bps at 2.724%.
• UK: The 2-Yr yield is up 1.4bps at 4.198%, 5-Yr is up 2.4bps at 4.222%, 10-Yr is up 3.5bps at 4.543%, and 30-Yr is up 3.6bps at 5.135%.
• Italian BTP spread down 1.6bps at 108.4bps / Spanish down 1bps at 62.2bps