Risk recoveries see core FI under pressure

Reports that Russia have been pulling back troops from the Ukrainian border has helped risk appetite through the European morning session with equities moving higher and core fixed income selling off (although there has been some pause in the FI moves lower following further headlines).

• Treasuries have seen the biggest moves, with the curve bear steepening and 10-year yields up 4.7bp on the day at writing.
• Gilts have been the exception. After decent labour market data this morning, we initially saw the whole SONIA futures curve move lower and gilts move lower on the open. However, we have now seen a decent reversal based on little new news - possibly positioning ahead of tomorrow's inflation data with the market looking overstretched and due for a bit of a move higher.
• Peripheral spreads (other than Greek) are generally a bit tigther today.
• TY1 futures are down -0-8+ today at 125-23 with 10y UST yields up 4.7bp at 2.036% and 2y yields up 1.2bp at 1.589%.
• Bund futures are down -0.44 today at 164.79 with 10y Bund yields up 1.5bp at 0.296% and Schatz yields up 0.8bp at -0.361%.
• Gilt futures are up 0.04 today at 119.68 with 10y yields down -1.8bp at 1.570% and 2y yields up 0.8bp at 1.512%.