ITALY AUCTION PREVIEW: 5/10-year BTP and CCTeu Auction
Italy will hold a 5/10-year BTP and CCTeu auction this morning. Although the 10-year BTP/Bund spread currently trades a multi-year lows of ~97.5bps, we don’t expect this to meaningfully impede demand at today’s sale. Demand for EZ peripheral debt remains solid, highlighted most recently by the E120bln order books at yesterday’s E13bln 10-year Obli transaction. The greatest widening risk for the BTP/Bund spread appears to be a re-intensification of EU/US trade relations, due to the impact it would have on risk sentiment and Italian export demand.
- The 2.95% Jul-30 BTP has been re-opened twice since the February launch, and will be on offer today for E3.0-3.25bln. The April re-opening saw a 1.52x bid-to-cover ratio for the E3.5bln issued.
- Today will be the first re-opening of the 3.60% Oct-35 BTP after last month’s launch. E3.0-3.25bln will be on offer today. The launch saw a 1.58x bid-to-cover ratio for the E4bln issued.
- We had discussed the possibility of a new CCTeu in our EGB Issuance, Redemption and Cash Flow Matrix last week and indeed the MEF will offer E3.0-3.5bln of the new Apr-34 CCTeu with a spread of 0.85%.
- Timing: Results will be available shortly after the bidding deadline closes at 1000BST/1000CET.
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ECB: 1-year Ahead Inflation Expectations Rise To Highest A Year
Eurozone consumer inflation expectations rose in March to the highest levels in a year, according to the ECB's Consumer Expectation Survey. However, this is unlikely to sway many Governing Council views, with the current focus clearly on downside growth risks stemming from tariffs and related uncertainty.
- Expectations for inflation over the next 12 months increased by 0.3 percentage points to 2.9%, the highest level since April 2024, while expectations for three years ahead edged up by 0.1 percentage points to 2.5%, the highest since March 2024.
- The four-analyst strong BBG consensus saw 1-year ahead expectations at 2.5% and 33-year at 2.3%.
- Expectations for inflation five years ahead, reported for the first time this month, were unchanged for the fourth consecutive month at 2.1%.
- Inflation over the previous 12 months was perceived at 3.1% in March. Data released by Eurostat showed year-on-year HICP at 2.2% that month.
MNI: ECB 1-YEAR CONSUMER INFLATION EXPECTATIONS 2.9%
- MNI: ECB 1-YEAR CONSUMER INFLATION EXPECTATIONS 2.9%
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