Bunds Outperform & Bull Steepen

EGBs have derived support from the combination of lower crude oil prices (with yesterday’s lows comfortably breached) and the latest ECB consumer inflation expectations survey revealing that “expectations decreased significantly - reversing most of the increases seen in the previous month.”

• Some pointed to comments from ECB hawk Knot, who noted that peak inflation was in the rear-view, although a closer look at his comments revealed continued worry that stickiness in inflation remains evident, with a hat tip to second round effects. Some caution re: potential corporate liquidity issues was also flagged, while Knot reaffirmed the idea that delayed impulses from already enacted tightening are still in the pipeline.
• Bunds run 2.5-5.5bp richer across the curve with bull steepening in play, while futures traded through yesterday’s high before moving away from best levels.
• Bunds outperform at the 10-Year point, with semi core spreads little changed to a touch wider, while peripherals are 0.5-2.0bp wider as BTPs underperform once again (~3bp or so of Friday’s tightening has been given back on net).
• Eurozone retail sales and ECB speak from Centeno provides the regional highlights during the remainder of the session after a soft round of German industrial orders crossed early on.