BONDS: EGBs-GILTS CASH CLOSE: Geopol Risk Bid Fades

European yields pulled back Tuesday, with geopolitical risk at the fore.

• Core global FI rose in European morning trade amid an escalation of Russia/Ukraine tensions and a change to Russia's nuclear doctrine in response to Ukraine firing US-made missiles into their territory.
• Yields hit the session's lows around 0900 London time. From there, Bunds and Gilts weakened fairly steadily as risk-off sentiment faded, with Russian foreign Minister Lavrov saying  "a nuclear war will not happen."
• While 10Y Bunds / Gilts closed up 7bp / 6bp respectively from their lows, German and UK curves both bull steepened on the day, with EGB spreads modestly wider.
• ECB's Panetta called for clearer forward guidance on future rate cuts, instead of the current meeting-by-meeting approach.
• BOE's Bailey and Lombardelli said they both see risks to inflation as broadly balanced - but see greater consequences if UK inflation becomes more entrenched.
• On that note, Wednesday's scheduled highlight is UK CPI - MNI's preview is here (PDF). As we write in the preview, we think there is potential for a bigger market reaction to a downside services surprise (vs an upside surprise).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany