Commerzbank Turn More Constructive

Commerzbank write “ahead of the weekend the market still needs to digest ifo and a long list of ECB speakers before the first March inflation indications will move into sight in the upcoming Easter week.”

• “The scorecard for Bunds will probably remain mixed overall (ifo stabilises while inflation falls further, but mainly due to base effects).”
• “Yet chances for longs have improved with Bunds showing resilience at 10y yields not far below the key 2.5% level and central bank expectations are a lot more realistic compared to recent months).”
• “Supply is taking a breather with risk equivalent EGB issuance set to drop to the lowest level year-to-date while sizable French redemptions are available for reinvestment since yesterday.”
• “In this environment upside inflation surprises next week could be explained away by the early timing of Easter. We thus turn more constructive and suggest buying Bund dips at 10y yields above 2.4%.”