BUNDS: Bobl/Bund Block Steepener

At a press conference following the conclusion of the Foreign Affairs Council meeting in Luxembourg, EU High Representative for Foreign Affairs and Security Policy Kaja Kallas said that EU officials are working on a 17th package of Russia sanctions ahead of the 7-8 May informal 'Gymnich' meeting of EU foreign ministers in Warsaw. Calls for the imposition of stricter sanctions on Russia have grown louder over the past 24 hours in the wake of a Russian ballistic missile attack on the Ukrainian city of Sumy in which dozens were killed. Kallas did not go into specifics on the package, saying only that it would target Russia's “shadow fleet and different elements”.

• Kallas: “Ukraine agreed to unconditional ceasefire already a month ago, and yet we are seeing that Russia alone wants war, because we have seen the deadliest attack …Sumy airstrike over the weekend. It is clear that they are stalling and not wanting peace at all.”
• Hungary is likely to offer the most resistance to any new sanctions package. After the FAC meeting, Szijjarto posted on X: "A set of fanatic, pro-war initiatives at today’s FAC. Billions more for Ukraine, more weapons, deploying military advisers, new sanctions on nuclear energy & push to open all accession chapters this year. We support none of it. Time to end the failed policy of the last 3 years." He said Budapest would oppose any sanctions on Russian energy imports, as well as any EU military training mission taking place on Ukrainian soil. 

ERM5 98.0625/98.125/98.1875c fly, bought for half in 4k.

• Offers generally spread across the APF gilt operation - with the most received for the shortest maturity gilt on offer (1.625% Oct-28 gilt) which saw half of the sales and the 4.75% Dec-30 gilt.
• The bid-to-cover was in line with the previous couple of quarters of short-dated operations (and notably higher than that seen for the medium-dated op last week).
• Reminder that we see another short-dated operation in 2 weeks time.