Gilts underperform ahead of the ECB Forum on Central Banking

Gilts have been the underperformers in core fixed income space this morning, with other core fixed income generally a bit lower with risk appetite fairly positive this morning.

• There is no clear new news for the UK but it appears as though a number of factors have helped UK sentiment over the past few days: a Brexit deal is looking a bit more likely with the UK in a weaker negotiating position. The Lords have voted against the most controversial aspects of the Internal Market Bill while press coverage of President-elect Biden's first phone call with PM Johnson said to focus on maintaining peace in Northern Ireland and sticking to international law. Both of these factors make a Brexit deal more likely.
• Brexit talks will continue today and there is little on the calendar other than the ECB's Forum on Central Banking. Lagarde will give an introductory statement before de Guindos chairs two panels on the de-globalisation impacts of Covid and the macro-financial impacts of climate change before Lane hosts a panel on the inflation objective and central bank communication. The data calendar is bare.
• TY1 futures are down -0-3 today at 137-11 with 10y UST yields unch at 0.978% and 2y yields unch at 0.183%.
• Bund futures are down -0.02 today at 174.00 with 10y Bund yields up 0.1bp at -0.485% and Schatz yields down -0.4bp at -0.720%.
• Gilt futures are down -0.28 today at 133.77 with 10y yields up 2.4bp at 0.424% and 2y yields down -1.1bp at -0.13%.