Conflict talks push core FI lower

Core fixed income remains under pressure this morning, with weekend rhetoric from both sides of the Russia-Ukraine conflict talking up the potential of a ceasefire as early as later this week.

• 10-year yields uniformly higher with increases on a 9bp handle for Treasury, Bund and gilt yields. Gilts have seen a more parallel shift higher, while the German and US curves have both steepened.
• Interestingly, Schatz yields are 7.5bp higher on the day while 2-year UST yields are only 6.2bp higher. This suggests the beta of Schatz yields to geopolitical events has increased since last week's more hawkish ECB meeting.
• It's a light day on the calendar today with the FOMC (Wed) and BOE (Thurs) decisions due. Tomorrow has a busier data schedule with UK labour market data, the German ZEW survey and US PPI all due for release.
• TY1 futures are down -0-18 today at 125-12 with 10y UST yields up 9.8bp at 2.093% and 2y yields up 6.2bp at 1.812%.
• Bund futures are down -0.86 today at 161.58 with 10y Bund yields up 9.9bp at 0.345% and Schatz yields up 7.5bp at -0.344%.
• Gilt futures are down -0.68 today at 121.58 with 10y yields up 9.8bp at 1.587% and 2y yields up 9.4bp at 1.398%.