Bunds Pare Gains Following Higher-than-expected Spanish CPI

Bunds are trading flat on the day, having fallen almost 50 ticks from early session highs following this morning's higher-than-expected Spanish inflation data. OAT and BTP futures are also now little changed.

• While it is hard to interpret any significant read-throughs from the Spanish print to the Eurozone-wide figure, it nonetheless sets the tone for potential upside risks to the region's inflation data over the next few days.
• The slightly firmer-than-expected run of Q4 flash GDP figures in Spain, Italy and the Eurozone will have also factored in.
• The move off highs comes after lower-than-expected borrowing estimates from the US Treasury and China-centric worry seemed to promote a bid through Asia-Pac hours.
• Supply from Germany, Italy and Greece will have also weighed in the run-up to the respective bidding deadlines.
• German and French cash yields are unchanged/a touch higher, while 10-year periphery spreads to Bunds are generally little changed.
• Later today, ECB-speak includes the hawkish leaning Vasle (1230GMT) and Nagel (1530GMT). This morning, the usually hawkish Kazaks re-asserted the importance of labour market data as a prerequisite for rate cuts.