Gilt Volatility In Focus Early, FOMC Minutes And PPI Eyed Later

UK Gilt markets remained the focus in early Wednesday trade, with attention set to turn to FOMC minutes later in the session, and US CPI tomorrow.

• Gilts have calmed after a sharp 150 tick drop at the open for 1st future (and almost 200 ticks lower at one point on a knee-jerk move). Overnight comments by BoE's Bailey affirming the end of emergency purchases this week were offset by an FT report this morning that the Bank was eyeing extending buys; but the BoE has officially reaffirmed Friday's end-date.
• Multiple European central bank speakers today: BoE's Pill and Mann (Haskel earlier didn't comment on mon pol), with ECB's Lagarde, Knot, and de Cos as well.
• USTs easily outperforming with yields down across the curve, taking a breather after late Tuesday's BoE induced sell-off.
• Sept PPI (0830ET/1330UK) and September FOMC minutes (1400ET/1900UK) eyed later, but much more focus on CPI Thursday. Fed's Kashkari, Barr, and Bowman appear as well.
• The German curve has modestly twist steepened; periphery EGB spreads are slightly tighter.

Latest levels:

• US: 2-Yr yld down 2.5bps at 4.2806%, 5Y down 3bps at 4.1405%, 10Y down 2.6bps at 3.9207%, 30Y down 1.4bps at 3.9083%.UK: 2-Yr yld down 7.2bps at 4.219%, 5-Yr up 1.2bps at 4.572%, 10-Yr up 5.3bps at 4.496%, 30-Yr up 11.2bps at 4.911%.
• DE: 2-Yr yield down 0.3bps at 1.838%, 5-Yr up 1.1bps at 2.069%, 10-Yr up 3.1bps at 2.329%, 30-Yr up 7bps at 2.371%.
• Italy / German 10-Yr spread 0.1bps tighter at 238bps