Remain Firmer But Off Intraday Highs As Flash PMIs Come Across Stagflationary

Core/semi-core EGBs have moved off intraday highs as the details of the January flash PMIs implied less of a dovish conclusion than the headline figures initially suggested.

• While the services PMIs were lower-than-expected in both France and Germany, both reports noted evidence of continued wage pressures amongst service sector firms. The Eurozone-wide release also noted the stagflationary impact of Red Sea disruptions on manufacturers.
• The stronger-than-expected UK flash PMI also weighed on the space.
• Bunds are +15 ticks at 134.08, after printing a post-data high of 134.42, though today's price action remains contained within yesterday's range.
• Pre-data support in wider core FI came from the PBoC's RRR cut announcement, detailed elsewhere.
• German and French yields are 2-3bps lower today, while periphery spreads to Bunds are tighter. Buoyant European equities alongside inferences that Spain/Italy will have supported the Eurozone-wide flash PMI print have enabled today's compression, with the 10-year BTP/Bund spread 2.6bps narrower at 154bps at typing.
• The remainder of today's regional docket is light, while the BoC decision at 1445GMT may garner some cross-border interest.