AMERICAS REFINING: Mexico’s Refining Revival a Worry for US Refiners

European yields fell Monday in a modest bull flattening move.

• In the restart of trade from the Christmas holidays for EGBs and Gilts (the latter of which traded for an abbreviated session on Dec 24), yields caught down to a slight rally in US Treasuries and pullback in crude oil.
• The core FI bid was aided by a retracement in equities following opening gains, though periphery EGBs shrugged off the broader (modest) risk-off move.
• There were no data nor central bank speakers of note.
• On the day, Bunds slightly outperformed Gilts with bull flattening in both the UK and German curves.
• Periphery/semi-core EGB spreads tightened, with BTPs leading the way.
• Spanish flash December inflation data highlights Tuesday's docket - it's seen moderating Y/Y (see MNI's full Eurozone inflation preview here).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.7bps at 2.115%, 5-Yr is down 3.4bps at 2.43%, 10-Yr is down 3.3bps at 2.829%, and 30-Yr is down 2.9bps at 3.459%.
• UK: The 2-Yr yield is down 1.3bps at 3.72%, 5-Yr is down 2bps at 3.952%, 10-Yr is down 2.1bps at 4.486%, and 30-Yr is down 2.3bps at 5.216%.
• Italian BTP spread down 1.6bps at 67.5bps / French OAT down 0.7bps at 69.7bps 

• Over 11,000 wk2 TY/TYG6 112.5 put spds, 8 net credit - Feb sold over, wk2 midcurve  expires Friday Jan 9.

-8,000 TYG6 112/113.5 strangles, 24.0 ref 112-23.5