• Meanwhile in markets, a return of inflation-is-high-and-OMG-central-banks-will-tighten-hard angst. A case in point is the Reserve Bank of Australia surprising markets this morning with a 50bps hike (to 0.85 percent) which was predicted by only a handful of analysts in a Bloomberg poll. And the RBA is keeping the door open to more jumbo hikes to boot. That sent Aussie sovereign yields higher by 6-15bps across a bear-flattening curve.
  • US Treasury yields are trading near Monday’s highs, with the 2y at 2.74 and the 10y at 3.05. Both are up by about 10bps from Friday’s close. Italian sovereign yields are in very uncomfortable territory, with the 10y trading at 3.42 and the spread with the Bund at 209bps. Worryingly, on the charts, the spread has broken out of its recent trading range:

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