Gilts outperform as UK Covid-19 Alert Level raised

Core fixed income is on the front foot this morning as concerns surrounding Omicron dominate markets his morning.

• Gilts are the outperformers on the day relative to Friday's close (but remain within Friday's range). News that the UK has upgraded its Covid Alert Level to Level 4 from Level 3, along with concerns about further governmental restrictions has been driving UK markets today. The short sterling strip is also outperforming Euribor and Eurodollar strips.
• Bunds are also moving higher and have broken through Friday's highs while Treasuries have underperformed (but still edged higher) with the market still looking for the Fed to quicken the pace of tapering on Wednesday.
• TY1 futures are up 0-2 today at 130-15 with 10y UST yields down -1.2bp at 1.473% and 2y yields up 0.8bp at 0.664%.
• Bund futures are up 0.07 today at 174.31 with 10y Bund yields down -1.4bp at -0.363% and Schatz yields up 0.4bp at -0.712%.
• Gilt futures are up 0.04 today at 127.36 with 10y yields down -2.4bp at 0.715% and 2y yields down -2.9bp at 0.390%.