Futures Move Off US CPI-Inspired Intraday Lows

Bunds pared some of their CPI-inspired losses, and have now stabilised somewhat with futures having traded in a ~20 tick range for the past 90 minutes. The first support at 132.89 (50% retracement of the Oct 4 - Dec 27 bull phase) was pierced following the US CPI release but prices quickly rebounded.

• Gilts have seen less of a recovery, likely a function of today's firmer than expect wage data and heightened concerns r.e. tomorrow's domestic CPI print (due 0700GMT/0800CET).
• Cash curves have bear flattened as ECB/BoE rate cut expectations have moderated further. Schatz yields are over 7bps higher today while 2-year Gilt yields are over 13bps higher. Gilt yields operate at or near year-to-date highs across the curve at typing.
• In spite of the rate cut repricing and European equity market weakness, periphery spreads are generally tighter to Bunds. The 10-year BTP/Bund spread is the exception, trading +0.2bps wider at 154.9bps.
• Tomorrow's focus will be on the aforementioned UK CPI data, though we also get the preliminary Eurozone Q4 GDP reading at 1000GMT/1100CET. The advance release from Jan 30 printed at 0.0% Q/Q and 0.1% Y/Y.