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Soft German CPI Figures Set Bullish Tone

BONDS

Softer-than-expected German state CPI data have helped set a positive tone for Bunds and global FI more broadly in Tuesday's European morning session.

  • With states representing just under 90% of the national weighting of CPI having reported, MNI estimates the national German reading to come in at 8.55% Y/Y, below the 9.0% consensus coming into the session.
  • Accordingly, Gilt and US Treasury yields have fallen sharply in their first trading day of 2023.
  • Curves have bull flattened.
  • Fairly limited data left in the rest of the session beyond German CPI, with final Dec US PMI and Nov Construction spending on the docket.

Latest levels:

  • Mar 10-Yr futures (TY) up 23/32 at 113-0.5 (L: 112-12.5 / H: 113-02)
  • Mar Bund futures (RX) up 106 ticks at 135.38 (L: 133.79 / H: 135.55)
  • Mar Gilt futures (G) up 160 ticks at 101.5 (L: 99.97 / H: 101.63)
  • Italy / German 10-Yr spread 2.2bps tighter at 209.8bps

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