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Lagarde in focus later as European peripherals under huge pressure

  • Bunds and to an even greater extent, European peripheral bonds are under pressure this morning following weekend comments from DNB President Knot over the weekend that a 25bp hike would be appropriate in Q4-22 following by another 25bp hike to bring the Deposit Rate to 0% in Q1-23. 10-year GGB spreads to Bunds are over 20bp wider on the day, 10-year BTP spreads 8.7bp wider at typing, while even core spreads are widening such as 10-year OAT spreads 1.7bp wider on the day. President Lagarde is due to give an introductory statement ahead of the European Parliament's Economic and Monetary Affairs Committee at 15:45GMT / 10:45ET. Her comments would have been in focus anyway, but with the huge moves in EGBs there is even more focus.
  • Moves in gilts and Treasuries have been more subdued with 10-year UST yields unch but shorter yields lower as the curve bull steepens. Gilt have seen short end yields higher, but little change in 10-year as the curve bear flattens.
  • TY1 futures are up 0-3+ today at 126-28 with 10y UST yields unch at 1.911% and 2y yields down -1.5bp at 1.298%.
  • Bund futures are down -0.36 today at 165.66 with 10y Bund yields up 2.5bp at 0.228% and Schatz yields up 1.3bp at -0.243%.
  • Gilt futures are up 0.02 today at 120.99 with 10y yields up 0.3bp at 1.412% and 2y yields up 1.5bp at 1.270%.

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