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EGBS: Bund Futures Off Highs Despite Soft German Inflation Signals

EGBS
BulletEurozoneFixed Income BulletsMarkets

Bund futures have pared earlier gains, even as German state-level inflation data suggests some downside risks to the national consensus of 2.3% Y/Y (due at 1300GMT/1400CET). The latest uptick in crude oil futures will have also weighed on EGBs.

  • Bund futures are now +13 ticks today at 134.10, off highs of 134.35.
  • Spanish headline HICP was in line with consensus at 2.4% Y/Y, but the slightly lower than-expected core CPI print (2.4% Y/Y vs 2.6% cons) provided some support earlier this morning.
  • Other data (slightly better-than-expected EC sentiment and in-line M3 money supply growth) did not have a major impact on the space.
  • The 10-year OAT/Bund spread narrowed ~5bps after Finance Minister Armand hinted at potential concessions around electricity taxes in the 2025 budget. The spread has since moved off lows, but is still 1.5bps tighter at 84bps today.
  • The BTP/Bund spread is also almost 2bps tighter today at 123bps. BTP/CCTeu supply was digested smoothly.
  • Activity is expected to be muted this afternoon given the US Thanksgiving holiday, but German national inflation and ECB speakers (Villeroy, Knot, Lane) will garner regional attention.
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Bund futures have pared earlier gains, even as German state-level inflation data suggests some downside risks to the national consensus of 2.3% Y/Y (due at 1300GMT/1400CET). The latest uptick in crude oil futures will have also weighed on EGBs.

  • Bund futures are now +13 ticks today at 134.10, off highs of 134.35.
  • Spanish headline HICP was in line with consensus at 2.4% Y/Y, but the slightly lower than-expected core CPI print (2.4% Y/Y vs 2.6% cons) provided some support earlier this morning.
  • Other data (slightly better-than-expected EC sentiment and in-line M3 money supply growth) did not have a major impact on the space.
  • The 10-year OAT/Bund spread narrowed ~5bps after Finance Minister Armand hinted at potential concessions around electricity taxes in the 2025 budget. The spread has since moved off lows, but is still 1.5bps tighter at 84bps today.
  • The BTP/Bund spread is also almost 2bps tighter today at 123bps. BTP/CCTeu supply was digested smoothly.
  • Activity is expected to be muted this afternoon given the US Thanksgiving holiday, but German national inflation and ECB speakers (Villeroy, Knot, Lane) will garner regional attention.