Below Consensus Spanish Flash CPI-induced Bounce Fades

Core/semi-core EGBs have faded from intraday highs attained following below-consensus Spanish inflation data, but remain firmer on the day. A reminder that French and Italian flash inflation prints are due on Friday.

• Spanish March flash inflation was lower than expected on the HICP and core CPI measure, but few details are available in the preliminary release.
• This morning, Latvian CB Governor Kazaks did not object to market pricing for a June rate cut. This is another instance of one of the traditional hawks moving toward the market/GC base case, akin to Muller yesterday.
• Executive Board member Cipollone struck an unsurprisngly dovish tone later in the morning.
• Spillovers from developments in Japan r.e. BoJ/MoF FX speculation have been limited thus far.
• Bunds are +14 ticks at 132.89. The March 25 high at 133.28 remains the first support.
• German and French cash yields are unchanged to 2bps lower on the day, while 10-year periphery spreads to Bunds are tighter with the exception of Greece. The 10-year BTP/Bund spread sits a touch below the 130bps handle at typing.
• Looking ahead, the EC's consumer and business survey for March will be of interest at 1000GMT/1100CET.