Core Firmer, BTP Spreads Tighter Amid Soft Tone From Hawkish Speakers

Core/semi-core EGBs are a touch firmer this morning, but still sit well short of yesterday's highs.

• A dovish reaction in Gilts to the latest comments from the BoE's Mann have spilled over somewhat into EGBs, while the historically hawkish ECB's Muller also appears to have moved closer to the market/GC base case of a June ECB cut.
• German GfK consumer confidence was a touch higher than expected but wasn't a market mover. Spanish Q4 GDP also confirmed flash estimates.
• Bunds are +21 at 132.77, though the first support remains some way off at 133.28 (Mar 25 high).
• German and French cash yields are 2-3bps lower today.
• The 2023 French fiscal deficit was 5.5% of GDP, versus the Government's target of 4.9% and wider than 4.8% in 2022. The 10-year OAT-Bund spread has widened almost 4bps over the last week, currently around 46bps.
• 10-year peripheral spreads to Bunds are generally tighter, with BTPs outperforming. The 10-year BTP/Bund spread is -2.0bps at 130.2bps, but remains almost 15bps above the narrowest levels of the year.
• The remainder of today's regional calendar is limited, though ECB Chief Economist Lane delivers a lecture at Trinity College Dublin at 1900GMT/2000CET.
• Focus remains on the March flash inflation prints later this week (Spain is due tomorrow). Our full inflation preview will be released later today.