The UK and German curves steepened further Thursday, with the UK short end notably outperforming following the BoE's decision to hike 25bp (and not 50bp).

• While the BoE decision itself was on the dovish end of expectations, UK rates moved off their lows during the press conference with Governor Bailey pushing back on rate cut speculation.
• After gapping higher at the open, 2Y UK yields fell by as much as 11bp before closing just a couple of bp down - mirroring the move in terminal BoE pricing which dropped 12bp at one point but recovered.
• The move in longer-end yields higher was a continuation of Wednesday's US-led sell-off triggered by large announced Treasury supply.
• Overall the UK curve twist steepened, with Germany's bear steeper.
• Periphery spreads mostly tightened, with BTPs underperforming with modest widening.
• Friday's schedule includes multiple Eurozone data points (including German factory orders first thing), and an appearance by BoE's Pill, but most attention is on the latest US employment report.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.1bps at 3.025%, 5-Yr is up 5.1bps at 2.604%, 10-Yr is up 7bps at 2.605%, and 30-Yr is up 6.4bps at 2.687%.
• UK: The 2-Yr yield is down 1.6bps at 4.98%, 5-Yr is up 2.3bps at 4.469%, 10-Yr is up 6.7bps at 4.47%, and 30-Yr is up 10.6bps at 4.655%.
• Italian BTP spread up 1.6bps at 166.9bps / Spanish down 0.6bps at 103.6bps