Inflation drives German curve, but yields didn't hit yesterday's highs

The big talking point of the European morning session has been inflation with the German state CPIs coming in higher than expected by around 1ppt and the Spanish HICP print beating expectations by 1.4ppt. This has led to the Euribor strip underperforming SONIA and Eurodollars while Bunds under perform gilts and Treasuries.

• Bunds and Treasuries both drifted higher through the Asian session and Treasury futures are now back pretty much unchanged to yesterday's close, albeit with an almost 5bp fall in 2-year yields leading to a decent bull steepening of the curve.
• The German curve has seen a bear flattening with Schatz yields up 7.6bp at 0.014% and 10y Bund yields up 4.4bp, with bigger moves seen in Euribor futures as markets price in a more aggressive rate path. Despite this Schatz yields reached a high of 0.036% today, below yesterday's high of 0.039% while 10-year Bund yields have only reached a high of 0.682% today, 5.0bp below the 0.732% peak seen yesterday.
• Gilts have seen a parallel 2bp shift, with yields moving higher.
• TY1 futures are up 0-0+ today at 122-11 with 10y UST yields up 0.8bp at 2.405% and 2y yields down -4.8bp at 2.320%.
• Bund futures are down -0.47 today at 156.90 with 10y Bund yields up 4.4bp at 0.674% and Schatz yields up 7.6bp at 0.014%.
• Gilt futures are down -0.14 today at 120.79 with 10y yields up 2.1bp at 1.662% and 2y yields up 2.0bp at 1.364%.