EGBS: Remain Below Pre-FOMC Levels; Peripherals Wider

Core/semi-core EGBs are still below yesterday’s U.S. CPI-driven highs, with spill over surrounding the FOMC decision dominating.

• A reminder that Fed dot plot dynamics drove the initial hawkish post-FOMC reaction.
• Bund futures are 12 ticks softer at 130.98.
• This morning’s heavy Italian supply will have weighed on BTPs in the run-up to the 1000BST bidding deadline, but the auction was well-digested.
• A weaker-than-expected round of Eurozone industrial production data was not a major market mover but may have helped limit moves to the downside.
• This morning’s ECB speakers (Muller, Vasle) added little new to the debate, noting that wage growth remains strong, while reiterating that the road to 2% inflation may be bumpy through 2024.
• The German and French cash curves have bear flattened today, while the 10-year OAT/Bund spread sits slightly wider, around 62bps.
• 10-year peripheral spreads to Bunds are also wider, with European equities trading on the defensive.
• The remainder of today’s regional calendar is light. US PPI provides the major focal point today, especially in the wake of yesterday’s soft CPI reading.