Firmer But Off Highs As Lagarde Strikes Cautious Tone

Core/semi-core EGBs sit firmer this morning, but an early rally lost steam as ECB President Lagarde cast a cautious tone at an ECON hearing.

• Lagarde warned that the ECB would avoid making a "hasty decision" on rates, noting that more evidence was still required to be confident inflation was heading back to target. This wait-and-see rhetoric echoes that of Bundesbank's Nagel and Bank of Spain's de Cos, who spoke yesterday evening and this morning respectively.
• Bunds are +41 ticks at 133.98, after reaching a high of 134.18 earlier. The 20-day EMA at 134.27 is the first resistance.
• Supply from Spain and France will have also pressured the EGB space in the background, while this morning's data were not really market movers (Spain Jan inflation confirmed flash, UK activity data was weaker than expected).
• The German and French cash curves have lightly bull flattened, while periphery spreads to Bunds are tighter as Estoxx futures push above Tuesday's high. The 10-year BTP/Bund spread is 1.6bps tighter at 150.0 at typing, still just above January's narrowest levels.
• The remainder of today's docket sees appearances from Chief Economist Lane at an online seminar on "Monetary Policy and Banks' Business Strategies" (1200GMT/1300CET), while the Bundesbank's Nagel also speaks. US data (in particular jobless claims and retail sales) will also be of cross-market interest.