Inflation the Highlight of the Day

European inflation data have been the highlight in a day that has been devoid of many other headlines as the UK takes a long weekend and gilts remain closed.

• Spanish CPI was a little softer than expected (only on the M/M measure) but German state data and Italian HICP data have both shown some weakness.
• Bunds have ground lower throughout the day and our technical analyst notes that after breaking former key support on Friday that the outlook for Bunds remains bearish.
• The calendar is pretty light for the rest of the day with French bills, the national German CPI print and Fed's Bostic speaking. Tomorrow will see more interest with final PMI prints and the ISM manufacturing both due for release while Friday will see the release of the US labour market report.
• TY1 futures are down -0-3+ today at 138-31+ with 10y UST yields down -0.3bp at 0.721% and 2y yields up 0.4bp at 0.132%.
• Bund futures are down -0.32 today at 175.36 with 10y Bund yields up 2.1bp at -0.389% and Schatz yields up 1.2bp at -0.660%.
• Gilt futures are unch today at 135.01 with 10y yields unch at 0.310% and 2y yields unch at -0.62%.