EUROPEAN FIXED INCOME UPDATE: bonds remain bid, but off best levels

Although the Rouble has rebounded relatively firmly from lows amidst a raft of rather antagonistic rhetoric, the market mood remains gloomy and core debt is clearly outperforming even though gains have been whittled down somewhat. Bunds are still nearly a full point above par between 166.38-165.50 parameters having petered out just 8 ticks shy of Friday’s best, while Gilts are holding up well given a sharp retreat at the front end of the UK curve in wake of another bank upping its forecast for BoE tightening (HSBC adding another 25 bp hike to its outlook through August), albeit just slipping to a marginal new 120.26 Liffe low. Elsewhere, US Treasuries remain nearer overnight highs than lows, 2 year notes aside amidst ongoing flattening after comments from Fed’s George who still on the 25 bp or 50 bp fence for March and does not see need for any inter-meeting moves, unlike Bullard who is due later.