EUROPEAN INFLATION: Analysts Update HICP Forecasts

Latest block trade lodged at 10:28:05 NY/15:28:05 London:

• TUU5 5K lots blocked at 103-18.75, looks like a seller.
• DV01 ~201K.

The Richmond Fed's regional manufacturing and services surveys for May showed improved activity, as expected - but remained in negative territory.

• Unlike some other regional Fed reports, there is limited anecdotal "evidence" or commentary for what is driving these survey results, but the figures are consistent with other "soft" data that the worst of the tariff fears may have subsided but sentiment remains weak.
• Further obscuring the read-through is the survey dates, which (based on the survey methodology) will have been conducted between April 24 and May 21, so it straddles both sides of the US-China trade war climbdown on May 12.
• The headline manufacturing composite index rose to -9 (in line with consensus) from -13, improving after two large monthly declines. The three components of the composite ticked higher: new orders ticked only slightly higher, to -14 from -15, shipments to -10 from -17, and employment to -2 from -5. Expectations, while still (unusually) negative for the 3rd consecutive month, saw a drastic improvement, rising 31 points to -6.
• The services readings similarly largely improved in some aspects but were still weak. The local business conditions index jumped 12 points to -18 (no consensus), with the 6-month outlook up 11 points to -18.
• Both marked the 3rd consecutive negative reading, and the report notes that regional service sector activity overall slowed in May, with the revenues index falling 4 points to -11, and employment fell 8 points to 0 (albeit demand, and expected future employment, revenues and demand, rose).

Prior session lows in gilt futures hold during a retest (90.99 in U5), before a bounce back to 91.10 as wider core bonds stabilise, cross-market cues still dominate.