BONDS: EGBs-GILTS CASH CLOSE: Yields Close Off Lows, But Curves End Bull Steeper

Continued risk-off fallout from Wednesday's US tariff announcement saw European yields fall sharply for a second consecutive session, with periphery/semi-core spreads widerning.

• The core FI space took its cue from tumbling equities in a flight to safety in early trade, with Gilts and Bunds rallying strongly in a continuation of Thursday's price action as US officials showed no sign of backing down from aggressive tariff implementation, and China announcing retaliatory tariffs of its own.
• Yields picked up from the lows set in late morning European trade though, due in part to Fed Chair Powell expressing a patient stance on rate cuts despite recent developments, and US payroll gains that were marginally more solid than expected.
• Both the UK and German curves bull steepened, with the German short end outperforming overall.
• That capped a week in which both the German and UK curves bull steepened, with Gilts outperforming Bunds: Germany 2Y yields -19bp, 10Y -15bp; UK 2Y yields -26bp, 10Y -25bp.
• Periphery EGB spreads widened as risk appetite evaporated, led by high-beta BTPs / GGBs.
• Attention over the weekend will be on US tariff developments - next week's schedule in Europe includes UK Monthly Activity Data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 12.1bps at 1.827%, 5-Yr is down 10.5bps at 2.128%, 10-Yr is down 7.3bps at 2.578%, and 30-Yr is down 6.3bps at 2.979%.
• UK: The 2-Yr yield is down 7.6bps at 3.934%, 5-Yr is down 7.6bps at 4.018%, 10-Yr is down 7.2bps at 4.448%, and 30-Yr is down 6.8bps at 5.116%.
• Italian BTP spread up 6.9bps at 119bps / Greek up 7.7bps at 89.1bps