[MARKET ANALYSIS] Trump reignites geopolitical tensions to the detriment of bonds

A bearish start to the day as US President Trump's primetime address reignited geopolitical tensions (recap on the feed, 07:35BST), lifting energy and in turn fanning the inflationary flame. Specifically, USTs dropped from 111-02 pre-Trump to a 110-24 knee-jerk low and have since hit a 110-16 trough. Lifting yields across the curve, 10yr to a 4.38% peak, though shy of Monday's 4.42% WTD peak. Similarly, the 2yr to a 3.86% peak, but shy of Monday's 3.89% WTD best. Action that has seen the implied magnitude of near-term tightening tick up by just under a bp worth. Ahead, the US docket features Challenger Jobs, ahead of Friday's March payrolls, weekly claims (does not coincide with NFP window) and import/export data. Thereafter, Fed speak from Logan (2026) and Bowman (voter); text and Q&A expected from Logan, who has not provided comments since the conflict began. EGBs and Gilts, in line with the above bearishness, Bunds hit a 125.19 trough with losses of 51 ticks at most, while Gilts got to a 87.85 low, with downside of 75 ticks. Since, they have bounced by around 20 ticks from extremes, but remain firmly in the red. The European docket is a light one; action will continue to be dictated by energy movements and associated inflation/central bank expectations from it. For the ECB and BoE, markets continue to price in 60bps and 41bps of 2026 tightening, respectively. Despite the recent inflation print from the EZ not yet showing second round effects, and despite Bailey pushing back on market pricing this week. Overnight, JGBs followed the above, but experienced the added bearish pressure of Berkshire mandating banks for potential benchmark Yen-denominated bond issuance.