EUROPE: Aix Economic Forum Underway, French PM To Speak @19:30CET

"The REPUBLIC OF LATVIA, rated A3/A-/A (sta/sta/sta - Moody’s/Fitch/S&P) has mandated BNP PARIBAS and Credit Agricole CIB as Joint Lead Managers for an upcoming 7-YEAR EUR Sustainability Bond Benchmark due 10th June 2033"... "The transaction will be launched in the near future, subject to market conditions"...."The proceeds of the Sustainability Bond will be used in accordance with the Republic of Latvia’s Sustainability Bond Framework, dated May 2026"...."BNP PARIBAS and Credit Agricole CIB acted as Joint ESG Structurers for the update of the Framework"

Details as per Bloomberg

• In the FI space, short-term conditions in Bund futures remain bullish following recent gains and the contract is trading closer to its recent highs. Last week’s rally resulted in a break of the 50-day EMA - currently at 125.64. This signals scope for a continuation higher near-term. Key resistance to watch is 126.64, the Apr 8 high. A move through this hurdle would highlight a stronger reversal. Key support has been defined at 123.74, the May 18 low. First support is 125.50, the 20-day EMA.
• The current short-term bull cycle in Gilt futures remains intact and last week’s move higher reinforces current conditions. The contract has traded through resistance at 88.08, the May 8 high. This signals scope for a climb towards 89.02, a 2.764 projection of the May 15 - 19 (low-high-low) price swing. Initial support lies at 87.62, the Jun 1 low, ahead of the May 22 low at 87.48.

The ECB estimates that core HICP rose 0.36% M/M on a seasonally adjusted basis in May, after 0.30% in April and 0.14% in March. This was driven by services, which rose 0.49% M/M after 0.35% prior – the highest rate since April 2025. Core goods inflation rose 0.12% M/M (vs 0.20% prior).

• Caution is required when interpreting the services figure, with the energy price shock alongside Easter-timing base effects potentially influencing the seasonal adjustment process. Of course, no details are provided in this release.
• Taken at face value, 3m/3m annualised SA services momentum rose to 3.61% in May, an 11-month high. Meanwhile, core goods momentum inched higher again to 1.38% (vs 1.34% prior).
• The ECB is firmly expected to hike rates next Thursday, with focus on the updated risk assessment and June macroeconomic projections. Today’s flash inflation data will likely be used as justification for the hike, but the details of the print on June 17 will be more important when assessing indirect effects of the energy shock, and second round effect risks further down the line.