Cash Bonds Cheaper After US & UK Airstrikes

TYH4 is trading at 112-10, +0-00+ from NY closing levels.

• US tsys are flat to 2bps cheaper, with a flattening bias, most likely in response to higher oil prices after US and UK airstrikes hit Houthi rebel targets in Yemen.
• Military actions against the Iran-backed group were initiated in response to a series of attacks on vessels in the Red Sea.
• These strikes signify a substantial escalation in the ongoing conflict in the Middle East, which commenced with the Hamas attack on Israel in early October. If this conflict expands, it has the potential to drive oil prices higher.
• After yesterday’s US CPI data, which was more-or-less in line with expectations, the market now awaits PPI data later today. MN Fed President Kashkari also speaks about economic conditions (1000ET).