Divergence between UK and Germany

There has been some divergence in core fixed income markets this morning.

• Gilts are the outperformers following a one tenth miss to CPI. This followed six consecutive prints of above-consensus inflation. Gilts have been retracing some of the sharp selloff they saw yesterday following the stronger than expected labour market print. The SONIA strip is also up by around 6 ticks with a steepening in the Whites.
• The German curve has underperformed as ECB's Rehn said that recent economic data releases have been "near" the "adverse" scenario in the ECB's March staff projections. Euribor Whites are down up to 5.5 ticks on the day with 10-year Bunds unch but Schatz yields up 4.3bp.
• Treasuries are a little higher on the day, splitting the difference between gilts and Bunds.
• US housing data and Canadian CPI are the highlights on the calendar with Fed's Harker also due to speak.