UK yields rose sharply again Thursday as the implications of Wednesday's budget announcement continued to be digested.

• Continued concern over the UK budget's inflationary and bond supply impacts weighed heavily on the UK curve, with the short end underperforming for a 2nd consecutive session as BoE cuts were further priced out.
• Italian and French inflation were largely in line with expectations. But this merely confirmed that after Wednesday's upside surprise in Germany, that Eurozone-wide core HICP failed to decelerate in October, defying expectations coming into the week (flash core was 2.7% Y/Y, vs 2.6% exp. and unch from Sep).
• Yields finished off highs but the damage was done in Gilts in particular.
• The UK curve bear flattened sharply, with Germany's twist flattening. Periphery EGB spreads were mixed, closing off session wides.
• The global focus Friday will be the US employment report, with final October Manufacturing PMIs also featuring.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.1bps at 2.281%, 5-Yr is up 0.8bps at 2.267%, 10-Yr is up 0.2bps at 2.39%, and 30-Yr is down 2.4bps at 2.595%.
• UK: The 2-Yr yield is up 11.8bps at 4.437%, 5-Yr is up 9.7bps at 4.323%, 10-Yr is up 9.4bps at 4.446%, and 30-Yr is up 4.8bps at 4.88%.
• Italian BTP spread up 1.2bps at 126.2bps  / Spanish down 0.4bps at 70.5bps