MNI China Daily Summary: Wednesday, June 19

MNI BRIEF: Rate Changes Affect Eurozone More Than US Firms-ECB

MNI BRIEF: BOJ May Real Export Index Drops 1.4% M/M

MNI BRIEF: PBOC, MOF To Promote Treasury Trades Progressively

MNI: PBOC Net Injects CNY276 Bln Via OMO Weds; Rates Unchanged

CHINA PBOC CONDUCTS CNY278 BILLION VIA 7-DAY REVERSE REPOS WEDS

US MBA: REFIS -0.4% SA; PURCH INDEX +2% SA THRU JUNE 14 WK

MNI: US MBA: MARKET COMPOSITE +0.9% SA THRU JUN 14 WK

MNI: EUROZONE APR CONSTRUCTION OUTPUT -0.2% M/M, -1.1% Y/Y

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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EGB/Gilt: Inflation Surge Will Unsettle ECB

BOND SUMMARY

European sovereign bonds have traded weaker this morning and curves have bear steepened, while gilts have modestly firmed. The US dollar has been on the backfoot with equities broadly higher.

  • There is further evidence of intensifying inflationary pressure in the euro area. French CPI for August beat expectations (1.9% Y/Y vs 1.7%), while the eurozone aggregate estimate soared to 3.0% from 2.2% the previous month and similarly wiping out the consensus estimate (2.7% Y/Y).
  • This morning's inflation prints follow yesterday's strong German inflation reading (3.4% Y/Y for August) and indications from the ECB's Villeroy that while financing conditions are now more favourable, there is no urgency to take a decision on PEPP in September.
  • Bunds have traded lower with cash yields up 1-3bp on the day and the long-end of the curve underperforming.
  • The BTP curve has similarly steepened with the 2s30s spread 1bp wider.
  • BTPs have underperformed core EGBs, with yields 1-4bp higher.
  • Gilts have bucked the EGB trend with the curve marginally bull flattening this morning.
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