EGB/Gilt: Sovereign FI & Equities Sell-Off

European government bonds have sold off sharply alongside broad downside for equities reflecting concerns about weaker growth, higher inflation and expectations of sustained monetary policy tightening.

• Gilts sold off sharply through the morning on the first day of trading following the Easter weekend holiday. The most recent pullback has been limited with yields now up 3-9bp on the day and the long-end of the curve underperforming.
• The bund curve has similarly bear steepened with yields up 3-8bp and the 2s30s spread widening 5bp.
• The sell-off in OATs has slightly lagged bunds with yields 1-6bp higher on the day.
• It is a similar story for BTPs where yields have pushed up 3-7bp across most of the curve, albeit with the very short end now close to flat on the day.
• Ukrainian President Volodymyr Zelenskyy has indicated that Russia has scaled up its offensive in the East of the country.
• Supply this morning came from Germany (Bobl, EUR3.284bn allotted), Spain (Letras, EUR1.959bn), the Netherlands (DTCs, EUR2.14bn), Finland (RFGBs, EUR898mn), the ESM (Bills, EUR973mn) and Slovakia (SlovGBs, EUR518n). Later today France will offer EUR4.3-5.5bn of BTFs.