[MARKET ANALYSIS] USTs firmer amid energy downside into the FOMC

A bullish start for fixed income benchmarks with action once again primarily dictated by energy and associated yield implications.
Bunds printed as high as 126.81, posting gains of 34 ticks at best. The European docket is headline by Final HICP (expected unrevised) and German supply (should pass without significant issue), before attention turns to the FOMC for a preview of how the ECB might choose to position itself amid the Middle East energy shock.
For Bunds, if the upside continues, we look to 127.00 before a handful of recent highs between 127.20-53 and then a bit of a gap until the 128.00 handle.
Gilts opened on the front foot, given the bullish lead from peers and, as has become the pattern, the benchmark outperforms with gains in excess of 50 ticks at best. Hit a 90.26 high, resistance ahead at 90.85 from the 11th of March, before the figure and numerous recent levels thereafter.
As above, the FOMC is the day's main focus point, and while Gilts won't have the opportunity to react today, it may serve as a handy precursor for the approach the BoE might take on Thursday. Elsewhere, the domestic focus on commentary from former Deputy PM Rayner, who was somewhat critical of Starmer's leadership at a late-Tuesday event, commentary that has pertinently drawn support from Greater Manchester mayor Burnham. Remarks that appear to be her notching up leadership pressure into the May local elections.
Finally, USTs are in line with the above but magnitudes more contained. Firmer by a handful of ticks in 111-30+ to 112-07 parameters. Looking to the FOMC, where the statement and language from Chair Powell, in addition to the updated forecasts and dots, will be scrutinised for insight into how the Fed potentially sees itself reacting to the Middle East conflict. Albeit, the main message will likely be that it is too soon for a full assessment of the inflationary and employment implications.