Gilts/German 5s30s the focus

Bund and gilt futures have been trading within yesterday's ranges while Treasury futures touched their lowest level since July 16 but have since also moved back into yesterday's range.

• The highlight of the morning session has been the German ZEW survey which saw the expectations component disappoint by about 10 points to come in close to November's levels. Core fixed income moved marginally higher on the release.
• Focus has more been on 5s30s curve in Europe, with gilt 5s30s at its lowest level since July 2020. German 5s30s are above last week's low of 70.2bp (currently at 70.9bp) but are flirting with the 61.8% Fibonacci retracement of the December 2020 to May 2021 move which comes in at 70.6bp.
• Looking ahead, a speech from Fed's Mester is the only noteworthy scheduled event for the rest of the day. The market will continue to await tomorrow's US CPI print and Thursday's UK activity data.
• TY1 futures are down -0-2 today at 133-23 with 10y UST yields down -0.2bp at 1.323% and 2y yields up 0.4bp at 0.225%.
• Bund futures are up 0.12 today at 176.64 with 10y Bund yields down -0.1bp at -0.462% and Schatz yields down -0.2bp at -0.755%.
• Gilt futures are up 0.10 today at 129.67 with 10y yields down -0.5bp at 0.578% and 2y yields down -0.3bp at 0.126%.