Early Swings On European CPI

Gilts are leading early modest losses in global core FI, with European inflation data the key to price action in the early going.

• Global bonds led by Bunds soared in early European trade as Spanish CPI came in on the soft side, but an apparent rise in German state core (though not headline) inflation saw early gains fully reverse ahead of the national figure out later.
• The German curve has bull flattened, with the UK’s twist flattening and the US twist steepening.
• The constant throughout has been stronger equities with better risk appetite benefiting EGB peripheries, ignoring potential for greater ECB tightening expectations
• US data includes jobless claims and the final read of Q4 GDP.
• Attention later in the session turns to Fed speakers: Barkin, Collins and Kashkari are on the schedule.

Latest levels:

• Jun US 10-Yr futures (TY) down 2.5/32 at 114-14.5 (L: 114-09.5 / H: 114-23.5)
• Jun Bund futures (RX) down 6 ticks at 135.81 (L: 135.47 / H: 136.77)
• Jun Gilt futures (G) down 17 ticks at 103.79 (L: 103.48 / H: 104.47)
• Jun BTP futures (IK) up 6 ticks at 115.25 (L: 115.03 / H: 116.08)