EGBS: Firmer With Strong EZ Labour Costs Having Little Impact

Core/semi-core EGBs are slightly firmer this morning, with Bunds trading close to yesterday’s highs of 130.84.

• Today’s corporate and sovereign supply burden has seemingly been offset by the near-1% pullback in oil prices.
• The preliminary estimate of the Eurozone Q1 labour cost index was 4.9% Y/Y, well above the 3.4% seen in Q4.
• While there was no material reaction in Bunds to the release, the data could set the tone for Thursday’s ECB negotiated wages release and the compensation per employee data in next month’s full Q1 national accounts.
• On the sovereign supply front, France has mandated banks to launch a new 20-year OATei benchmark, in line with MNI’s expectations.
• Bunds are +27 ticks at 130.79, having traded in a tight 34 tick range today with volumes once again below average.
• The German and French cash curves have bull flattened, while 10-year periphery spreads to Bunds are a touch wider with European equities off yesterday’s highs.
• With a limited regional calendar for the remainder of today, focus will be on this afternoon’s Fed speak and Canadian CPI.