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EGBS: Off Highs As Markets Digest German State CPI

EGBS
BulletFixed Income Bullets

Core/semi-core EGBs are off highs, as markets digest the details of this morning’s German state-level CPI data.

  • While the NSA monthly state-level data suggests downside risks to consensus, MNI’s calculations indicate a broadly in line annual print. The transport component is seen boosting services CPI in line with expectations.
  • Issuance from Germany (15-year Bund) and Spain (10-year syndication) will also be helping to cap rallies, alongside the firmer crude backdrop.
  • ECB’s Kazaks noted that there is no assured subsequent rate path beyond the 25bps June cut, with the “last mile” of disinflation expected to be bumpy.
  • Bunds are -38 ticks at 129.64, with yesterday afternoon’s US-led selloff still setting the tone.
  • The German and French cash curves have bear steepened, while 10-year periphery spreads to Bunds are generally a touch tighter.
  • The 10-year BTP/Bund spread was once again unable to breach 132bps this morning.
  • The national German flash inflation print is due at 1300BST
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Core/semi-core EGBs are off highs, as markets digest the details of this morning’s German state-level CPI data.

  • While the NSA monthly state-level data suggests downside risks to consensus, MNI’s calculations indicate a broadly in line annual print. The transport component is seen boosting services CPI in line with expectations.
  • Issuance from Germany (15-year Bund) and Spain (10-year syndication) will also be helping to cap rallies, alongside the firmer crude backdrop.
  • ECB’s Kazaks noted that there is no assured subsequent rate path beyond the 25bps June cut, with the “last mile” of disinflation expected to be bumpy.
  • Bunds are -38 ticks at 129.64, with yesterday afternoon’s US-led selloff still setting the tone.
  • The German and French cash curves have bear steepened, while 10-year periphery spreads to Bunds are generally a touch tighter.
  • The 10-year BTP/Bund spread was once again unable to breach 132bps this morning.
  • The national German flash inflation print is due at 1300BST