Central bank repricing trumps inflation concerns today

Markets are more focused on downside risks to medium-term growth than on near-term inflation risks this morning. There have been a couple of legs higher helped by headlines such suggesting Russia would continue its "operation until goals met" (IFX) and further (as yet unsubstantiated) talk that Belarussian troops have also entered Ukraine to assist their Russian counterparts.

• Against this backdrop we have seen Italian inflation surprise to the upside this morning with the HICP measure rising 0.8%M/M against expectations of a 0.2%M/M print while German regional data suggests some (small) upside risks to the German print due later today. However, this seen to be trumped by a repricing of central bank expectations - both in terms of extended ECB QE (see peripheral spreads tightening) and pushing back rate hike expactations. Note also, the MNI sources story released yesterday stating that even the ECB's hawks now don't expect hikes in 2022 (full story here).
• Euribor futures as much as 17 ticks higher at writing, with similar moves in SONIA futures (although less at the front-end) and the Eurodollar strip up to 14 ticks higher.
• TY1 futures are up 0-16 today at 127-30 with 10y UST yields down -5.9bp at 1.768% and 2y yields down -7.3bp at 1.361%.
• Bund futures are up 2.08 today at 169.12 with 10y Bund yields down -10.8bp at 0.024% and Schatz yields down -9.7bp at -0.636%.
• Gilt futures are up 1.53 today at 124.61 with 10y yields down -11.4bp at 1.294% and 2y yields down -9.6bp at 0.934%.