Core fixed income moving higher

Core fixed income is lurching higher, reversing some of the downside seen over the past few days, initially on market-positive European election results and then higher-than-expected HICP prints across Spain, Germany and, to a lesser extent, France. There is no real headline driver of the reversal, although it seems to be driven by Bunds, and we note that yields have dropped back into negative territory on the 10-year Bund - a psychological move. PMI data this morning may have helped contribute a little with input prices falling back to less extreme levels (despite output prices seeing near-record increases). This underlines that there may still be some transitory nature to the inflation move.

• Looking ahead we have the ISM manufacturing survey and JOLTS both released at 15:00GMT / 10:00ET. The prices component of the ISM survey will be in focus, as will JOLTS which has been mentioned numerous times by FOMC members as a key indicator to watch.
• TY1 futures are up 0-8 today at 128-07 with 10y UST yields down -2.3bp at 1.755% and 2y yields down -1.8bp at 1.162%.
• Bund futures are up 0.33 today at 169.44 with 10y Bund yields down -2.1bp at -0.12% and Schatz yields down -1.9bp at -0.508%.
• Gilt futures are up 0.28 today at 122.24 with 10y yields down -2.9bp at 1.272% and 2y yields down -1.9bp at 1.018%.