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China Reports Spur Core FI Rally Ahead Of US CPI

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Core/semi-core EGBs have rallied sharply this morning, though remain below Friday’s highs at typing. Wider macro focus remains on this afternoon’s US CPI report.

  • Overnight reports that “China is considering a proposal to have local governments across the country buy millions of unsold homes” have seemingly been the main catalyst, with the USD also weaker on the day.
  • Bunds are +57 ticks at 131.08, with the first resistance at 131.13 (May 14 high). The 50-day EMA at 131.69 continues to represent the key short-term resistance.
  • Eurozone preliminary Q1 GDP was in line with flash estimates at 0.3% Q/Q, while employment also grew 0.3% in Q1.
  • Elsewhere, the EU’s latest inflation forecast was revised lower, though the Commission warned that delays to the rate cutting cycle were possible should services inflation remain sticky.
  • Today’s ECB speakers (Rehn, Villeroy, Muller) have offered little new to the debate on where ECB rates will head after the June meeting.
  • The German and French cash curves have bull flattened today, while 10-year periphery spreads to Bunds trade tighter.
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Core/semi-core EGBs have rallied sharply this morning, though remain below Friday’s highs at typing. Wider macro focus remains on this afternoon’s US CPI report.

  • Overnight reports that “China is considering a proposal to have local governments across the country buy millions of unsold homes” have seemingly been the main catalyst, with the USD also weaker on the day.
  • Bunds are +57 ticks at 131.08, with the first resistance at 131.13 (May 14 high). The 50-day EMA at 131.69 continues to represent the key short-term resistance.
  • Eurozone preliminary Q1 GDP was in line with flash estimates at 0.3% Q/Q, while employment also grew 0.3% in Q1.
  • Elsewhere, the EU’s latest inflation forecast was revised lower, though the Commission warned that delays to the rate cutting cycle were possible should services inflation remain sticky.
  • Today’s ECB speakers (Rehn, Villeroy, Muller) have offered little new to the debate on where ECB rates will head after the June meeting.
  • The German and French cash curves have bull flattened today, while 10-year periphery spreads to Bunds trade tighter.