Core FI rallies as risk appetite softens

Bonds are on the front foot this morning with a general risk-off tone sweeping over the market. Some are pointing towards French first round election polling where le Pen is said to be leading Macron as the trigger. 10-year Bund and gilt yields are around 2.2bp lower at writing, with Treasuries trailing. A slightly disappointing IFO print has not helped sentiment either.

• Against this backdrop, 10-year BTP spreads have narrowed around 4.5bp after headlines this morning that Conte would not step down (contradicting reports on Friday and in the weekend press).
• Looking ahead we have a number of speakers and panels in Davos today while the ECB's Frank Elderson will give an introductory statement at the ECON Hearing of the European Parliament.
• TY1 futures are up 0-2 today at 137-03 with 10y UST yields down -0.7bp at 1.080% and 2y yields up 0.1bp at 0.124%.
• Bund futures are up 0.39 today at 177.55 with 10y Bund yields down -2.2bp at -0.536% and Schatz yields down -1.5bp at -0.728%.
• Gilt futures are up 0.31 today at 134.47 with 10y yields down -2.3bp at 0.283% and 2y yields down -1.0bp at -0.141%.