Don't fight the Yellen

Familiar themes are the talking points of markets today but with Italian politics, Eurozone supply and Yellen's testimony the main events. Core bonds have generally drifted a bit lower with European peripheral spreads tightening a little.

• After surviving a vote of confidence in the Chamber of Deputies yesterday, Italian PM Conte faces a confidence vote in the Senate today (timing is uncertain). The outcome of the vote is unclear. One possible scenario would see Conte win the vote but without a majority of Senators (with IV set to abstain). It's unclear whether President Matterella would allow a government to continue if it couldn't command an outright majority, however.
• Supply in the Eurozone has been heavy again with syndications from France and the UK. France has order books over E59bln for the new 50-year OAT, 0.50% May-72. The UK has order books over GBP60bln for the new 25-year gilt, the 0.875% Jan-46.
• The big focus of the day will be on Yellen's speech ahead of the Senate Finance Committee at 10:00ET/15:00GMT. The speech will be closely watched as to whether she will advocate expansionary fiscal policy for an extended period if necessary.
• TY1 futures are down -0-3+ today at 136-24 with 10y UST yields up 2.4bp at 1.108% and 2y yields up 0.3bp at 0.138%.
• Bund futures are down -0.13 today at 177.24 with 10y Bund yields up 1.0bp at -0.519% and Schatz yields up 0.6bp at -0.714%.
• Gilt futures are up 0.01 today at 134.36 with 10y yields up 0.7bp at 0.293% and 2y yields up 0.6bp at -0.137%.