BONDS: EGBs-GILTS CASH CLOSE: Week Of Two Halves Concludes With Gains

European FI concluded a week of two halves with a modest rally Friday, the second consecutive session of gains after three days of losses.

• Gains were concentrated in the morning session, with some follow through from Thursday's softly-perceived US data and a key rejection of the 2.70% level in 10Y Bund boosting sentiment.
• Global core FI traded heavier in the European afternoon however, with the University of Michigan survey showing US consumer inflation expectations soaring.
• In data, the Eurozone posted a record trade surplus in March (largely on US tariff front-running), while final Italian HICP was revised down.
• Bunds outperformed Gilts, with the German curve leaning bull steeper from the 5-30Y segment; the UK saw twist flattening. In both cases, the short end underperformed on the curve.
• The week saw bear flattening in both the UK (2Y +9.7bp, 10Y +8.2bp) and Germany (2Y+7.0bp, 10Y +2.8bp).
• Periphery EGBs traded mixed. Iberian instruments underperformed, with Spanish and Portuguese spreads around 1bp wider to Bunds on the day.
• Next week's schedule includes May flash PMI data, UK CPI, and the European Commission's latest economic forecasts.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.5bps at 1.855%, 5-Yr is down 3.5bps at 2.155%, 10-Yr is down 3.2bps at 2.59%, and 30-Yr is down 2.6bps at 3.04%.
• UK: The 2-Yr yield is up 1.7bps at 4.005%, 5-Yr is up 0.5bps at 4.146%, 10-Yr is down 1.1bps at 4.649%, and 30-Yr is down 1.6bps at 5.394%.
• Italian BTP spread up 0.1bps at 100.6bps / Spanish bond spread up 0.9bps at 62.4bps