MNI EXCLUSIVE: IG Metall Senior Official On Wages Amid Soaring German Inflation

Tsy $52B 2Y note sale at the top of the hour (91282CEA5), 2Y WI currently 1.562%, 57.2bp cheaper to last month's high yield. Tsy futures trading weaker, short end underperforming at the moment.

• January auction recap:
  • Tsy futures remained bid after $54B 2Y note auction (91282CDV0)
    
    stopped through: 0.990% high yield vs. 1.002% WI; 2.81x bid-to-cover outpaces last moth's 2.55x, well over five auction avg: 2.51x.
    
    
    • Indirect take-up climbed to new 1+ year high of 66.00% vs. 61.39% in Dec (2021 high);
    • Primary dealer take-up: 24.61% vs. 24.22% in Dec;
    • Direct take-up: new 1+ year low of 9.39% vs. 14.39%.

Timing: The 2Y note results will available shortly after the competitive auctions closes at 1300ET.

Markets entered Tuesday firmly in risk-off mode, but faded the move later in the morning - with geopolitics driving throughout once again.

• The risk-on reversal came as both Russia and the US/Europe appeared more measured in their approach to the Ukraine crisis than had been feared late Monday.
• After showing some signs of short covering last week (see today's Europe Pi for more), Bund futures sold off sharply this morning.
• Short end rates sold off; one exception was March UK which further faded 50bp hike probability following relatively dovish comments by BoE's Ramsden.
• BTP spreads fell sharply thanks to the broader risk-on move.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 5.5bps at -0.399%, 5-Yr is up 4.9bps at 0.001%, 10-Yr is up 3.7bps at 0.243%, and 30-Yr is up 2.2bps at 0.496%.
• UK: The 2-Yr yield is up 5.4bps at 1.338%, 5-Yr is up 6bps at 1.362%, 10-Yr is up 6.3bps at 1.471%, and 30-Yr is up 5.6bps at 1.548%.
• Italian BTP spread down 2.4bps at 168.1bps / Spanish down 1.7bps at 102bps