Firmer But Off Highs Ahead Of US Payrolls Report

Bunds are +25 ticks at 130.64, trading in the middle of today’s tight 29 tick range.

• Most of yesterday afternoon’s gains have held, with little in the way of market moving regional newsflow or data this morning.
• Eurozone March unemployment was in line with consensus estimates at 6.5%. Current sell-side consensus expects an uptick to 6.7% through Q2.
• After hours Thursday, ECB Chief Economist Lane delivered a lecture on the “The analytics of the monetary policy tightening cycle”. In line with the ECB’s April meeting guidance, he did not pre-commit to a rate decision at any of the upcoming meetings.
• Elsewhere, ECB GC dove Stournaras suggested that three rate cuts in 2024 was now “the more likely scenario” following recent growth and inflation outcomes. He previously pointed to the need for four rate cuts before year end.
• Short-end German and French cash yields are a touch lower this morning, helping curves to lightly steepen.
• 10-year periphery spreads to Bunds are slightly tighter, with European equities 0.5% higher today. Fitch are scheduled to provide a sovereign rating update on Italy after hours (current rating: BBB; Outlook Stable) – see our earlier comment for more.
• Cross-market focus remains on the US labour market data at 1330BST/1430CET.