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EGBS: Little Reaction In Bund Futures To Eurozone Flash Nov HICP

EGBS
BulletEurozoneFixed Income BulletsMarkets

There was little reaction in Bund futures to Eurozone core HICP coming in a tenth below consensus on a rounded basis, with the unrounded print (2.74% Y/Y vs 2.8% cons) taking the shine off of the downward surprise.

  • Bund futures are +17 ticks at 134.54, in the middle of today’s range. The early rally was largely UST-led, though weakness in crude oil and equity futures also factored in. Equities have since moved away from session lows.
  • ECB 1-year ahead consumer expectations were above consensus at 2.5% Y/Y (vs 2.3% cons, 2.4% prior), but 3-year expectations were steady at 2.1%.
  • ECB-dated OIS price a ~10% implied probability of a 50bp cut next month, given the lack of downside surprise in the flash inflation data.
  • The German curve has twist flattened, with 2s10s 2bps lower at 10.5bps, down from multi-year highs of almost 27bps earlier this month.
  • The 10-year OAT/Bund continues to oscillate on French fiscal/political developments. Far right RN leader Le Pen has set a Dec 2 Deadline for PM Barnier to respond to her party’s 4 'Red Lines' on the 2025 budget. S&P are scheduled to review France’s sovereign rating after hours.
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There was little reaction in Bund futures to Eurozone core HICP coming in a tenth below consensus on a rounded basis, with the unrounded print (2.74% Y/Y vs 2.8% cons) taking the shine off of the downward surprise.

  • Bund futures are +17 ticks at 134.54, in the middle of today’s range. The early rally was largely UST-led, though weakness in crude oil and equity futures also factored in. Equities have since moved away from session lows.
  • ECB 1-year ahead consumer expectations were above consensus at 2.5% Y/Y (vs 2.3% cons, 2.4% prior), but 3-year expectations were steady at 2.1%.
  • ECB-dated OIS price a ~10% implied probability of a 50bp cut next month, given the lack of downside surprise in the flash inflation data.
  • The German curve has twist flattened, with 2s10s 2bps lower at 10.5bps, down from multi-year highs of almost 27bps earlier this month.
  • The 10-year OAT/Bund continues to oscillate on French fiscal/political developments. Far right RN leader Le Pen has set a Dec 2 Deadline for PM Barnier to respond to her party’s 4 'Red Lines' on the 2025 budget. S&P are scheduled to review France’s sovereign rating after hours.