The Fed will definitely be raising the rate at the end of this month, and it's certainly possible we'll get a second rate increase later. With some supply pressure, that will also lead to higher yields.

The ECB has signaled that if there was any risk inflation expectations would run away, they would contain them. With this central bank rate-hike cycle, it may lead to a flat yield curve by April.

The ZEW indicator is at levels which previously have marked a high, and discussion will now start on whether the ECB will hike rates earlier than in March. This will put the front-end under pressure.

What we are seeing currently is that it's not a one-way road for strong economic data. Ten-year yields could fall to 3.35 percent in a month.

Asset liability matching demand from pension funds will support the longer end and assuming the ECB hikes rates aggressively, we might see a flat yield curve by April.

In all likelihood, disappointing data will at some point in time dampen rate hike expectations. There's a reasonably good chance for yields to move substantially lower over the course of this year.

In the near term, the gilt market will react to any economic data release that helps shape investors' BOE view. The annual growth figure was lower than expected, showing continuation of declining growth.

The central bank is very likely to send a stronger message that rates are going up in the near future, because the economic outlook is getting brighter. This will put downward pressure on the bond market.