• A couple of things in markets this morning are drawing our attention. Most important of which is the lack of a breakout in long end Treasury yields despite inflation doom-mongering and expectations that the recovery is set to accelerate further. At pixel time the 10y Treasury yield was at 1.61, which means it is at the lower end of its trading band (trading range this quarter is 1.60 to 1.80.
  • Bund yields are doing what US Treasury yields did in the first quarter, namely to break out to the upside. It’s almost too easy to put the belated sell-off on the EU’s vaccine drive, which lags the UK’s and US’ vaccination campaigns by about a quarter. In any case, as we discuss below, the sell-off in Bunds and even peripheral debt is unlikely to spook the ECB.


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