Weakness Persists Across the Board; EZ December Flash Inflation In Line

Core/semi-core EGBs have continued yesterday's downward momentum, printing at intraday lows at typing. An inline Eurozone HICP flash release for December, alongside weaker-than-expected German retail sales this morning proved insufficient to halt the latest selling pressure.

• Bund and OAT futures trade ~70 ticks lower on the day, while German and French cash curves have bear flattened. Price action coincides with a further pricing-out of central bank easing this year, as ECB-dated OIS now prices below 150bps of rate cuts through '24 for the first time since the Dec13 Fed.
• Periphery spreads to Bunds are mixed, with the 10Y BTP/Bund spread -0.6bps tighter on the day and Spanish/Portuguese spreads a little wider. Greece once again underperforms, with the GGB/Bund spread over 2bps wider on the day, having widened over 10bps this week.
• The remainder of today's docket is highlighted by the US labour market release at 1330GMT. Markets expect the US to have added 175k jobs over the month of December, tipping the unemployment rate higher by 0.1ppts to 3.8%.