EUROPEAN FIXED INCOME UPDATE; debt divergence, dislocation and decoupling

US Treasuries remain somewhat sidelined and relatively contained after more spill-over from Wall Street’s recovery feats during overnight trade, but EU bonds have more than made up for the lack of price action with further range extensions and deviations in direction. Bunds staged a more pronounced bounce when EU equities were on the verge of wiping out the bulk or even all their recovery gains, and reached 167.20 (+27 ticks vs -62 ticks on the day at one stage) before fading again, in contrast to EZ periphery peers and Gilts that are still above par and close to intraday highs (latter 121.29 on Liffe for a ¼ pt gain vs 32 tick loss). No obvious rhyme or reason for the divergence, but the ongoing volatility is understandable as markets continue to monitor headlines, while more hawkish positioning and pricing for the BoE relative to the ECB may also be a factor as rate hike expectations are pared generally given the Russia-Ukraine situation.