Waiting for tomorrow's ECB decision

Despite some equity indices such as Eurostoxx moving to new highs this morning the European morning fixed income session has had much more of a "wait and see" mood to it ahead of the ECB meeting tomorrow.

• Treasuries hit their highs of the week during the Asian session but futures are only a tick lower than yesterday's close now while Bunds and gilts are little changed, with mixed moves for European peripheral spreads today (Greek spreads are tighter but Italian spreads a little wider).
• As we write in our ECB preview, tomorrow's meeting will be closely watched for indications of how the ECB will respond to the recent rise in nominal yields. Given the divergence of views within the GC on the nature and drivers of the bond sell-off, it may still be too early for the ECB to clarify exactly what it means by 'favourable financing conditions' and how it will preserve them, let alone devise an immediate policy response. Markets remain in wait-and-see mode nonetheless.
• TY1 futures are down -0-1+ today at 132-08 with 10y UST yields up 2.7bp at 1.555% and 2y yields unch at 0.162%.
• Bund futures are unch today at 171.23 with 10y Bund yields down -0.5bp at -0.306% and Schatz yields down -0.2bp at -0.688%.
• Gilt futures are down -0.03 today at 128.71 with 10y yields up 0.1bp at 0.726% and 2y yields down -0.8bp at 0.069%.