EGBs-GILTS CASH CLOSE: Reversal On Geopolitical Relief

Markets entered Tuesday firmly in risk-off mode, but faded the move later in the morning - with geopolitics driving throughout once again.

• The risk-on reversal came as both Russia and the US/Europe appeared more measured in their approach to the Ukraine crisis than had been feared late Monday.
• After showing some signs of short covering last week (see today's Europe Pi for more), Bund futures sold off sharply this morning.
• Short end rates sold off; one exception was March UK which further faded 50bp hike probability following relatively dovish comments by BoE's Ramsden.
• BTP spreads fell sharply thanks to the broader risk-on move.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.5bps at -0.399%, 5-Yr is up 4.9bps at 0.001%, 10-Yr is up 3.7bps at 0.243%, and 30-Yr is up 2.2bps at 0.496%.
• UK: The 2-Yr yield is up 5.4bps at 1.338%, 5-Yr is up 6bps at 1.362%, 10-Yr is up 6.3bps at 1.471%, and 30-Yr is up 5.6bps at 1.548%.
• Italian BTP spread down 2.4bps at 168.1bps / Spanish down 1.7bps at 102bps