EUROPEAN INFLATION: 12-Month Eurozone Consumer Inflation Expectations Accelerate

Gilt futures (Z5) registered a fresh cycle low at the open, basing at 90.22 before a recovery to 90.55 as wider core global FI firms.

• Bears remain in technical control. Fresh extension lower would target the key support at the May 22 low (90.11) on a continuation chart. Bulls need to retake 91.24 to start turning the tide in their favour.
• Yields ~2bp lower across the curve.
• Fiscal fragility remains the key topic from a domestic perspective, while the recent hawkish repricing further forwards on the curve holds.
• 2s have probed 4.00% in recent days, but bears have failed to force a sustained break above that level. The benchmark hasn’t closed above 4.00% since June 9.
• 10s haven’t tested the April 9 high (4.800%), topping out at 4.765% yesterday.
• 30s ~7bp off their multi decade high (latter located at 5.659%).
• 2s10s last 77.2bp, unable to retest the July high of 80.4bp.
• 5s30s ~2bp below cycle highs (~149bp), registered earlier this month.
• Little of note on the UK macro calendar today, but the DMO will come to market with GBP5bln of the 4.375% Mar-28 gilt this morning.
• Note that the minutes of the latest DMO consultation with market participants pointed to an ongoing preference for a reduction in WAM. Details of syndication preferences can be found in recent bullets. We will provide deeper thoughts on the update tomorrow.

• A peculiar bid in Govies in the last few minutes, and speaking to many desks very little was seen as a new news, or headline.
• There was some notable pick up in flows, Bund was bought in 6k, Bobl 5k, that's despite the German supply coming up this Morning.
• Schatz was bought in 5k, BTP 1k and ERU5 in 5k.
• Volumes are on the low side overall and may have helped exacerbate some of the moves.
• Bund is testing the initial resistance at 129.62.

• Some broader lows for the EUR here, initially a function of the Dollar bid, but the Currency is now testing intraday lows against the GBP, USD, JPY, CAD, CHF, TRY.
• The Dollar breaks new highs versus the GBP, AUD, TWD, CNH, CHF, PLN, CZK, NOK, MXN, NZD, CAD, and the SEK.
• The EURUSD is testing the 50day EMA right here at 1.1599.
• As the worst performer, the NZDUSD targets 0.5829, Yesterday's low, but Market Participants will look at 0.5800 for better support.