Rates Off Lows, Equities Stage Late Rebound as Brent Crude Sours

Rates held weaker levels after Thursday's close -- but off lows -- a variety of factors in play after 30YY tapped 2.4006% high while 10YY tapped 2.0179%, yield curves bounced off flatter levels.

• FI markets reversed gains during early London trade, extended lows across the curve into late morning after ECB policy annc kept rates steady but accelerated asset purchase wind down. The "hawkish hold" message looks to conclude QE in third quarter "If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of our net asset purchases."
• ECB presser w/Pres Lagarde helped yields take another leg higher on comments such as "persistence of higher price expectations uncertain" and of course "war is a substantial upside risk to inflation". Cold comfort(?): money markets not seeing "sever strain" as a result of sanctions on Russia.
• Relatively muted react to hot CPI coming out as expected +0.8% MoM, 7.9% YoY, core YoY +6.4%, highest inflation levels since the early '80s.
• While inflation metrics remain worrying, uncertainty due to Russia's war in Ukraine is starting to cool down more hawkish forward policy views with Fed eager to address rising inflation -- but not wanting to paint themselves into a corner.
• Tys pare losses after strong $20B 30Y auction re-open (912810TD0), Bond sale trades through 2.5bp on 2.375% high yield vs. 2.400% WI; 2.46x bid-to-cover vs. 2.30x last month.
• Cross assets: Still weaker, stocks quietly bounced back near midmorning highs in SPX eminis: 4251.5 (-15.25) -- traders citied renewed selling in oil as Brent extends session to 111.04, WTI to 105.82.
• After the bell, 2-Yr yield is up 3.5bps at 1.7145%, 5-Yr is up 5.3bps at 1.9313%, 10-Yr is up 4.4bps at 1.9969%, and 30-Yr is up 4.5bps at 2.3797%.