SPAIN AUCTION RESULTS: Bono/ObliObli-Ei Results

Dutch flash HICP inflation dropped to 2.95% Y/Y in May, down from 4.14% in April and notably softer than the 3.8% consensus estimate (which only consisted of 5 analysts). This equates to a 0.85% M/M sequential drop (-0.2% cons). The headline decrease was services-driven: The category fell to 2.81% Y/Y, more than making up for April's jump to 5.97% for the lowest rate since March 2022.

The print should skew Eurozone HICP expectations further towards headline coming in below the 2.0% Y/Y consensus as detailed in our earlier STIR bullet.

• There are no further details on services in the flash data - so we will have to await the final release to assess how much this was driven by one-offs (Easter Effect reversals could be observed in other countries) but the drop here remains notable.
• Non-energy industrial goods meanwhile remained comparatively little changed, printing 1.75% Y/Y (vs 1.55% prior).
• Inflation in food, alcohol and tobacco continues to be elevated in the Netherlands, at 7.01% Y/Y in May (vs 7.16% prior).
• Energy inflation accelerated to -1.08% Y/Y (-3.22% prior), sequentially, prices fell (-0.65% M/M).
• The national CPI meanwhile also dropped off (3.3% vs 4.1% prior, no cons).
• For reference, Netherlands represents around 6% of the overall 2025 Eurozone HICP basket.

Goldman Sachs continue to be “positive on Eurozone sovereign credit as ECB easing and German fiscal matters provide an effective policy put on a cyclical and medium-term horizon, respectively”. However, amid increasingly tight valuations and small carry cushion, they believe EGB compression vs. Bunds “will be harder to engineer going forward, requiring fresh positive catalysts, or the sustained absence of negative catalysts”.

• They highlight that “the last year has seen OATs catch-up to fair value based on debt metrics, limiting the scope for outperformance vs southern peers despite trading much cheaper vs. respective history”.
• Looking forward, Goldman suggest that “rather than outperformance, what is at stake for OATs is the ability to continue to trade on broader European risk. This underscores the importance of policy continuity as a way to crowd-in global portfolio flows and to activate the safe-haven properties of European fixed income at this juncture”.

Of note:

EURUSD 1.2bn at 1.1395/1.1400.

USDCAD 1.05bn at 1.3700.

AUDUSD ~1bn at 0.6400/0.6415.

EURUSD ~1bn at 1.1400 (wed).

USDCAD 1.68bn at 1.3725/1.3750 (wed).

EURUSD 2.24bn at 1.1400 (thu).

USDJPY ~1bn at 143.00 (thu).

EURUSD ~1bn at 1.1400 (fri).

• EURUSD: 1.1348 (1.16bn), 1.1350 (2.05bn), 1.1395 (307mln), 1.1400 (954mln), 1.1450 (871mln).
• USDJPY; 143.00 (581mln).
• USDCAD: 1.3700 (1.05bn).
• AUDUSD: 0.6400 (311mln), 0.6415 (672mln).