Bunds Bid On U.S. CPI, Some Key Spreads In Wider EGBs compress

Spill over from U.S. CPI is in the driving seat, with German FI futures turning bid on the back of some of the shifts in the underlying CPI metrics that we have already flagged and given that a fair few in the market were attuned to the potential for an upside surprise in the core CPI print (all of the major German bond futures continue to operate in familiar territory). The shift on the wider Bund curve is relatively parallel, with the major benchmarks 4-5bp richer on the day after moderating from post-reaction data richest levels. The spill over from FOMC-dated OIS pricing into ECB-dated OIS has been modest, but aided in facilitating spread compression across some of the major EGB measuring sticks, with French, Spanish, Portuguese and Italian 10s moving to tightest levels of the session vs. Bunds.