Short-End Moves Feature In Broader Retracement

Weakness at the short end of the US curve is the standout move in early Tuesday trade, with some of Monday's huge moves in Global FI partially reversing ahead of the US CPI report later today (MNI preview here).

• Early rallies in Tsys, Gilts and Bunds (triggered in part by concerning - though not clearly new - headlines on Credit Suisse's financial situation) have since faded.
• After Monday's 57bp trading range, 2Y Tsys have traded in a 37bp range, with a post-Sept low of 3.8243% hit before bouncing to 4.188% (up 21bp). FOMC March 25bp hike is around 70% implied vs a pause, vs ~50% at Monday's low.
• The US curve has twist flattened (30Y yields are lower, 10s up just 1bp), with the UK's bear steepening and Germany's twist steepening.
• ECB terminal hike pricing has bounced after hitting 3.08% (autumn), last 3.37%. For Thursday's decision, there's around 50%/50% prob of 25bp/50bp hikes (MNI's preview was out yesterday). UK jobs data was mixed, and unlikely in our assessment to change BoE MPC policy views.
• While CPI is the US highlight, we also get the latest NFIB report, while Fed's Bowman speaks at a community banking event after the close.

Latest levels:

• Jun 10-Yr US futures (TY) down 20/32 at 114-1 (L: 114-00.5 / H: 115-07.5)
• Jun Bund futures (RX) down 67 ticks at 135.53 (L: 135.53 / H: 137.03)
• Jun Gilt futures (G) down 83 ticks at 104.04 (L: 104 / H: 105.49)
• Italy / German 10-Yr spread 0.6bps wider at 193bps