Bunds Outperform OATs and BTPs; Eurozone Flash Inflation Below Consensus

Bunds are firmer today, aided in the latest instance by the below consensus Eurozone March flash inflation data.

• Although national level data had largely telegraphed a below consensus HICP print, the 2.4% Y/Y headline and 2.9% Y/Y core readings still surprised some analysts’ updated expectations to the downside.
• Elsewhere, Eurozone February unemployment was 6.5% (vs 6.4% cons, a 0.1pp upwardly revised 6.5% prior).
• Bunds are +27 ticks at 132.41, sitting comfortably within well-defined technical parameters.
• Impending 10-year Bund supply from Germany may weighing, but German cash yields are still flat to 1bps lower today.
• OATs and BTPs underperform Bunds, with OAT futures +5 ticks and BTP futures -30 ticks at typing,
• 10-year periphery spreads to Bunds are wider, with the BTP/Bund spread 3.7bps wider on the day. The spread saw some widening after headlines r.e. the EU opening a deficit infringement procedure for Italy crossed. The higher-than-expected Italian February unemployment rate was not a market mover.
• The ECB’s de Cos is scheduled to speak at 1400BST today, while the US ISM services and ADP employment change data also will garner cross-market interest this afternoon.