EGB/Gilt: Brief Respite

European government bonds have reversed some of yesterday's flight to safety gains, while regional equities have broadly inched higher following a bout of heavy selling the previous day.

• There have been no significant positive catalysts this morning, with market moves likely reflecting a period of consolidation following a burst of volatility.
• Gilts have sold off through the morning with the curve bear flattening. Cash yields are now up 7-14bp with the curve 7-8bp flatter.
• The sell-off in bunds has been less emphatic with yields up 3-7bp.
• OATs have slightly underperformed bunds on the day with yields pushing up 5-8bp.
• BTPs have underperformed core EGBs with yields up 10-15bp.
• The geopolitical situation continues to worsen with the Russian Defence Ministry reporting that it has captured the port city of Kherson, while fears remain of a intensification of the bombardment of Kyiv.
• The ECB's Luis de Guindos earlier stated that the impact of the Russia invasion of Ukraine on energy prices would add to inflation pressure and weigh on economic activity.
• The Eurozone CPI estimate for February came in above the Bloomberg survey (5.8% Y/Y vs 5.6%).
• Supply this morning came from the UK (Gilts, GBP3.25bn), Germany (Green Bund, EUR1.441bn allotted) and the Eurozone (EU Bills, EUR4.993bn).