BUNDS: /SWAPS: ASWs Look Through Latest Bund Rally

• The German Bund is slowly edging back towards the 2.50% mark in Yield, the range stands at 2.497%/2.518% (low/High) so far today.
• We noted that the small UK Data beat had no impact on the contract, and there was some early Cash buying interest in Germany, likely Tech led as the Yield broke above the 2.50% resistance.
• Price action and Volumes are more limited since Europe joined the session, and the 2yr Schatz stays in a tighter range ahead of the Heavy 2yr supply, would equate to 47.9k Schatz.
• The small initial resistance in Bund is at 132.26, although better will be seen at 132.59 20-day EMA.

Gilt futures underperform Bunds, as markets weigh stronger-than-expected signals from the quantity side of the labour market against broadly in line pay growth.

• Gilt futures are -36 ticks at 92.61. The Feb 12 low at 92.31 remains intact, with futures troughing at 92.43 at the open.  Initial resistance is the Feb 10 high at 93.71.
• The curve has lightly bear steepened, with yields 2-3bps higher.
• The 10-year Gilt/Bund spread is 2bps wider at 205.5bps, unwinding a good deal of yesterday’s tightening. 10-year yields are 3bps higher today at 4.557%, just short of the Feb 12 high at 4.579%.
• BOE Governor Bailey speaks in a Fireside Chat on “Preserving and enhancing open financial markets” at 0930GMT, so is unlikely to focus on monetary policy topics.

Talks are underway in the Saudi capital Riyadh between delegations from the US and Russia in what could prove the first step towards peace talks to end the war in Ukraine. The US has painted the discussions as preliminary talks to infer whether Russia is serious about holding eventual ceasefire negotiations. Russia, on the other hand, has said the talks will cover "the entire complex of Russian-American relations”, preparations for peace talks, and planning for a meeting between Presidents Putin and Trump. 

• Much of the meeting set to be behind closed doors, so headlines could come out sporadically or may be restricted to official pressers or readouts.
• No Ukrainian delegation is taking part in these discussions, with the US claiming that as they are not peace negotiations Ukrainian representation is not needed at this stage. Speaking in the UAE on 17 Feb, Ukrainian President Volodymyr Zelenskyy said "We cannot recognise [peace] agreements...without us,".
• Some of Ukraine's European allies met in Paris on 17 Feb. UK PM Sir Keir Starmer's proposals for UK and US troops to serve in Ukraine as peacekeepers have exposed cracks within the alliance. Politico: "German Chancellor Olaf Scholz seemed quietly furious when he told reporters he was a “little irritated” by the talk, which he called “completely premature” and “highly inappropriate.” Polish PM Donald Tusk made clear he doesn’t want his army to contribute, while the FT reported that Italian leader and Trump pal Giorgia Meloni [...] told leaders that sending troops was “the most complex [option] and least likely to be effective."