The softer tones carry over to Europe as risk stays more subdued

  • German DAX futures -1.3%
  • UK FTSE futures -1.3%

The decline in European futures is more measured, even when you put together the drop in the cash market yesterday - as compared to US stocks.

While convexity hedging may be part of the backdrop in the bond market, global steepening and a rise in real yields everywhere is a strange one when you consider that the reopening theme is following different timelines for each country/region.

The fact that yields are surging despite breakevens slipping this week tells the story that this is more than just a buff in inflation expectations. Adding to that is real yields jumping by nearly 40 bps now from the lows seen a the start of the month. Ouch.