Inflationary concerns drive core FI lower; gilts underperform

Inflationary concerns have been the driver for markets this morning with European natgas and oil both seeing substantial increases in prices on the back of weekend reports that sanctions on Russia could be ramped up. After initially limited and risk-off related moves in STIR markets, we are now starting to see some downward pressure, which has spread further out the curve.

• The SONIA strip and gilts have seen the biggest moves, with SONIA Reds, Greens and Blues up to 7.5-9.5 ticks lower on the day while 2-year gilt yields are up 5.6bp and 10-year yields up 4.3bp. Moves in other core fixed income have been more subdued.
• It's a pretty light calendar for the rest of today, with Russia-Ukraine headlines likely to continue to be the driver. The only schedule speaker is Cunliffe who is due to testify on EU-UK relations to the Lords Economic Committee. Monpol speak is likely to be limited this week ahead of the ECB and next week's Fed/BOE decisions.
• TY1 futures are down -0-1+ today at 128-15+ with 10y UST yields up 0.9bp at 1.742% and 2y yields up 1.3bp at 1.492%.
• Bund futures are down -0.31 today at 167.63 with 10y Bund yields up 0.3bp at -0.70% and Schatz yields down -3.5bp at -0.779%.
• Gilt futures are down -0.49 today at 125.16 with 10y yields up 4.3bp at 1.249% and 2y yields up 5.6bp at 1.107%.