[MARKET ANALYSIS] Fixed income follows energy but is relatively contained thus far, Gilts marginally underperform

A marginally bullish morning, at first at least, for fixed after relatively contained overnight trade. Modest upward impetus came after the Tasnim piece regarding the Hormuz blockade; though, it does appear to be a re-run of remarks from Tuesday.
More recently, the complex has come under pressure after a UKMTO report around a cargo ship incident 8nm from Iran; reacting to the upside in energy, the MTO report has been spurred. An update that follows a vessel being fired on 15nm from Oman this morning.
USTs got to a 111-13 peak after that report, then gradually faded to unchanged and to a 111-07+ low thereafter, with losses of two ticks at most vs earlier gains of 4+. For the US, the main scheduled event is the 20yr auction. However, focus will undoubtedly be on any update to the geopolitical situation; see the morning's analysis piece for more.
Gilts opened higher by 11 ticks, in line with the action in Bunds at the time. Thereafter, the benchmark climbed to a 88.08 peak with gains of 20 ticks at most. Upside also spurred in reaction to the morning's CPI series, with the headline as forecast and the core figure cooler-than-expected. However, the all-important services lifted by more than expected vs the prior; albeit, that itself is somewhat caveated by the early Easter, and may be partially unwound in April.
Furthermore, the signs of raw material factory prices jumping M/M, given the energy surge, could be taken as an early sign of second-round effects, and thus prompt some hawkishness in April by the BoE. Digestion of this may explain why Gilts have dipped further into the red than peers, Gilts -22 ticks at most vs -17 for Bunds; albeit, the typical outsized Gilt performance and/or domestic political turmoil may also be factoring.
Overall, for the BoE, they will likely be willing to wait and see for more data at this stage, as the lack of overt second-round effects means they have time to assess and weigh the growth vs inflation situation.
Bunds in-fitting with the general move. Hit a 125.81 peak with gains of c. 15 ticks before moderating and fading alongside the latest energy uptick. Enter a window of potential ECB speak just off a 125.51 low.