Strong German IP and Hawkish Fed Repricing Weighs On EGBs

Core/semi-core EGBs remain under pressure to begin the week, with hawkish Fed cut repricing and a strong German IP reading the main drivers this morning.

• German industrial production exceeded expectations in February with a second consecutive monthly uptick of 2.1% M/M (highest since January 2023; vs +0.5% cons/+1.3% prior revised from +1.0%).
• This added to the negative bias that was seen through the Asia-Pac session, largely a continuation of hawkish Fed repricing following Friday’s US strong jobs report.
• Bunds are -48 ticks at 131.74, having breached the April 2 low at 131.87. A continuation lower would refocus attention on key support and the bear trigger at 131.23, the Feb 29 low.
• German cash yields are 4 to 5bps higher today, while the French curve has bear flattened.
• 10-year periphery spreads to Bunds are tighter, with European equities edging higher to start the week.
• The remainder of today’s calendar is quiet, with market focus on Wednesday’s US CPI report before Thursday’s ECB decision.