EGBS: Bunds Back At Intraday Lows Post US Data

The stronger-than-expected US consumer confidence reading pushes Bunds back toward intraday lows, currently -35 ticks at 130.01.

• Of today’s ECB speakers, the hawkish-leaning Knot did not commit to a rate path beyond the June meeting, while the hawkish Holzmann noted that he expects either two or three ECB rate cuts this year.
• Holzmann’s view is broadly in line with market pricing (ECB-dated OIS price 61bps of cuts through the remainder of this year).
• Spanish 10-year Obli’s have not exhibited any notable underperformance following today’s syndication mandate, with spreads to Bunds less than 1bp wider today.
• In contrast, 10-year BTP/Bund spreads are almost 4bps wider today, with European equities having fallen sharply off highs.
• Although the timing of the syndication is earlier than last year, we had expected an announcement as early as this week due to strong primary demand, Spanish redemptions and also due to participants wanting to lock in rates ahead of the first ECB cut.
• Tomorrow’s calendar is headlined by the German flash May inflation release. See our full Eurozone inflation preview here.