Core FI divergence as CB reactions to Omicron seem to diverge

There has been clear divergence between Treasuries and gilts/Bund this morning. Treasuries continue to underperform after Mester's comments last night that a faster tapering pace was still on the table to give the Fed optionality to raise rates to combat inflation if needed. This follows up Powell's comments a couple of days ago and seems to suggest that the Fed is seeing the Omricon as more a future risk rather than an increase in uncertainty that should delay any policy actions. This seems to contrast with comments from the BOE and ECB recently.

• Looking ahead the highlight of today's CB-speak are likely to come from Daly and Barkin at the Peterson Institute. We also have weekly claims data.
• TY1 futures are down -0-5 today at 130-24+ with 10y UST yields up 3.2bp at 1.437% and 2y yields up 4.4bp at 0.598%.
• Bund futures are up 0.35 today at 172.42 with 10y Bund yields down -0.8bp at -0.354% and Schatz yields down -0.6bp at -0.778%.
• Gilt futures are up 0.23 today at 126.43 with 10y yields down -0.5bp at 0.814% and 2y yields down -0.4bp at 0.513%.