EGB/Gilt: Risk-Off Gains

European government bonds have rallied this morning, while the dollar has been on the front foot against G10 FX.

• EU member states have reached an agreement to reduce gas use by 15%. This comes amid indications that Russian supplies through the Nord Stream 1 pipeline are expected to fall to 20% of capacity from Wednesday.
• Bunds opened lower, but have made gains through the morning with yields now 6-9bp lower.
• OATs have performed in a similar fashion with yields down 5-10bp.
• BTPs have had a choppier session, while still trading higher on the day across much of the curve.
• The final two candidates to succeed UK PM Boris Johnson - Rishi Sunak and Liz Truss - took part in a televised debate yesterday. Both candidates and their campaign teams have stepped up attacks on each other in recent days as the contest becomes increasingly competitive with no clear winner in the debates.
• Gilts have firmed across much of the curve, although the very long end has traded weaker.
• Supply this morning came from Italy (BTP-ST/BTPei, EUR3.75bn), Austria (ATBs, EUR1.378bn)
• Focus turns to the FOMC decision tomorrow with another 75bp policy rate hike expected.