Holding The Bulk Of Early Gains

EGBS consolidate the bulk of their oil-/ECB consumer inflation expectations survey-derived gains as we move through early afternoon trade.

• There has also been plenty of other external factors to assess, with the RBA delivering a hike that surprised vs. broader market pricing and the general expectations of economists (although many noted it was a close call pre-decision) and the latest speculation surrounding deposit rate cuts at Chinese banks (which we suggest is as much to do with bank NIM preservation as it is economic stimulus) noted.
• Bunds are 2.0-6.5bp richer across the curve, bull steepening, with similar dynamics observed across most of the EGB curves that we monitor.
• EGB spreads vs. German 10s are little changed to a touch wider, with Italy widening the most (~2bp), giving back a little more of Friday’s notable tightening.
• ECB-dated pricing has moderated a touch in terms of the degree of hiking priced, but sits in familiar territory, as we noted in our previous bullet.