Follow through from hawkish Fed and higher German inflation weigh on FI

After yesterday's more hawkish FOMC Minutes (both in terms of the potential for a near-term hike and the potential for faster balance sheet unwind) core fixed income markets are coming under some pressure this morning.

• German state CPI data has come in higher than generally expected with M/M prints ranging from 0.5-0.7% so far. The comparable national print was expected to increase 0.4%M/M while HICP is expected to rise 0.2%M/M. Eurozone PPI data was also stronger than expected.
• The higher inflation prints are likely to be spooking the market ahead of tomorrow's Eurozone CPI print with EGB spreads widening, notably in France, Ireland, Spain and Italy.
• TY1 futures are down -0-8+ today at 128-18+ with 10y UST yields up 2.4bp at 1.731% and 2y yields up 3.1bp at 0.860%.
• Bund futures are down -0.53 today at 170.22 with 10y Bund yields up 3.1bp at -0.96% and Schatz yields up 1.5bp at -0.611%.
• Gilt futures are down -0.53 today at 123.39 with 10y yields up 4.8bp at 1.134% and 2y yields up 3.3bp at 0.786%.