EGB/Gilt: Gilts Outperforming Core EGBs

European bonds have rallied this morning with gilts leading the charge among core FI. Equities have been mixed across the region as has been FX performance against the US dollar. The fluid situation with respect to the Ukraine crisis remains the key driver of markets.

• A senior official at the White House stated that claims of Russia withdrawing troops are false and that 7,000 additional soldiers have arrived at the Ukrainian border, although Moscow rejects this claim.
• Gilts appear to be benefiting from safe haven demand amid the geopolitical headwinds with cash yields 2-9bp lower on the day and the curve bull steepening.
• The ECB's Pablo Hernandez de Cos argued that while it is clear that the ECB needs to move in a tighter direction, while also warning against overreacting.
• Bunds opened higher and have held onto the early gains with yields 1-2bp lower.
• OATs have marginally outperformed bunds with yields down 2-3bp.
• BTPs have rallied strongly, with the short-end of the curve outperforming. The 2s30s spread has widened 2bp.
• Supply this morning came from France (OATs, EUR10.996bn & Linkers, EUR1.498bn), Spain (Bono/Obli, EUR4.53bn) and Ireland (IRTBs, EUR750mn).