Temporary Respite For Risk

Sovereign fixed income has sold off across the board alongside a rally in equities, building on yesterday's risk respite. At this stage market moves seem to reflect an unwind from the intense risk-off trade following the Russian invasion, rather than reflecting a material improvement in the outlook for the Ukrainian crisis.

• Russia and Ukraine have agreed to a temporary ceasefire in order to allow civilians to evacuate through the humanitarian corridors. However, there is no sign of Moscow ending hostilities and progress on bilateral talks remains elusive.
• USTs have sold off and the curve has bear flattened. Yields are now up 4-6bp, while TZM2 trades at 126.27, towards the bottom of the day's range.
• In Europe, gilts and bunds lead the sell off.
• Gilt cash yields have pushed up 4-7bp, while bund yields are up 6-7bp.
• The oil rally has lost some momentum with Brent crude trading down to USD125.72/b having come within a hair's breadth of USD140/b intraday on Monday. The US ban on oil imports will keep prices elevated and has further supported market-based measures of inflation expectations.