Free Trial

Firmer On Positive Inflation Data; Peripheries Tighter

EGBS

Core/semi-core EGBs are off the day's best levels, but remain firmer on the day on the back of soft EZ inflation indications and dovish Fed-Speak yesterday.

  • November flash inflation estimates from German states and Spain have pointed to a downside risk to the current Eurozone HICP consensus (at 2.7% Y/Y, released tomorrow @ 1000GMT). Yesterday's impetus came as Fed Governor Waller - an influential member of the FOMC - brought up the idea of US rate cuts in the coming months to maintain the level of real rates.
  • Bund and OAT futures are both up around 40-50 ticks at typing, while the German 2s10s curve lightly bull steepens as 10-Year Bund supply would have limited the downside in yields. The OAT curve is seen bull flattening, with the 2s10s curve down -2.4bp today at -24.9bp.
  • Peripheries outperform in line with the positive risk sentiment across markets, with the 10-Year BTP/Bund spread tightening 3.1bps to 172.4bps. The final 5/10-Year BTP auction of the year will have weighed in the lead up, but demand metrics came out reasonably strong with a decent auction price vs the pre-auction mid. News that the EC has approved Italy’s E16.5bln NGEU payout will have also been supportive.
  • The remainder of today's docket sees the German national CPI print at 1300GMT, with no ECB speakers currently scheduled.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.