EGB/Gilt: Broad Gains

European government bonds have traded firmer this morning while equities are close to flat on the day.

• Despite potential signs of a marginal de-escalation in the Ukraine crisis yesterday, indications that Russian troop levels could be rising on the border reflect the still heightened degree of uncertainty over the direction of the conflict.
• UK inflation came in above expectations for January (5.5% Y/Y vs 5.4% survey).
• The gilt curve has twist steepened. Yields at the shorter end are 4-5bp lower on the day, while pushing up 2bp at the longer end. The 2s30s spread is 7bp wider.
• Bunds started the session on a weak footing before making gains through the morning and now trading marginally above yesterday's close.
• OATs have performed in a similar fashion with the curve 1bp steeper.
• BTPs recovered earlier losses to now trade close to flat on the day.
• Supply this morning came from Germany (Bund, EUR3.273bn allotted), Portugal (BTs, EUR1.25bn) and the Eurozone (EU Bills, EUR1.991bn). In addition, syndicated auctions were held for the ESM (0% Dec-26, books last seen above EUR37bn) and Slovenia (2.25% Mar-32 SLOREP tap, books above EUR900mn & 0.4875% Oct-50 SLOREP, books above EUR1.1bn).
• Italy bought back a combined EUR2.231bn of BTP/CTZ/CCTeu.