• Markets have started the week on a quiet note ahead of several key central bank meetings later this week. US Treasury yields are trading near last week’s highs. The 10y at 1.62 is now up 71bps for the year, reflecting a moderate rise in real yields and a partial normalization of the term premium. Pricing of Fed rate hikes has been rather modest, with OIS forwards still at two hikes for early 2023.
  • Bunds are bid this morning following a negative newsflow from the continent this morning. Because of the EU’s vaccine flailing, France is on the verge of a new lockdown; Italy just lock down again and German Chancellor Merkel’s CDU party suffered painful defeats in two state elections over the weekend. Furthermore, minus 30bps turns out to be a strong support for Bunds since the level is ECB President Lagarde’s line in the sand.



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