EGB/Gilt: Energy Inflation Biting

European government bonds have traded mixed this morning with gilts edging lower and EGBs lacking clear direction. Regional equities are broadly lower while the dollar is on the front foot against G10 FX.

• Gilt yields are now 1-2bp higher with the curve bear steepening.
• Further fueling UK inflation pressures, the energy regular Ofgem, has announced that the energy price cap will be lifted again, resulting in 54% rise in the spring. The move is further adding to the political pressures facing the government and the PM Boris Johnson, with reports that some form of fiscal support package is being considered to alleviate the burden
• Bunds trade close to flat on the day across much of the curve.
• OATs have traded in a relatively tight range through the morning with the curve a touch steeper.
• The BTP curve has marginally twist flattened.
• Moscow has warned that the US decision to send more troops to Europe in a bid to support Ukraine it is a 'destructive step'.
• Supply this morning came from France (OATs/Green OAT, EUR11.496bn) and Spain (Bono/Oblis/Obli-Ei, EUR6.099bn)