EU CONSUMER CYCLICALS: El Corte Inglés: 8Y FV (with image)

• BOJ Governor Kazuo Ueda on Tuesday insisted that the BOJ will raise rates if necessary, but stressed uncertainty after a meeting which saw another hold as well as a decision to reduce the pace of its tapering of bond purchases following poor responses to 30-year government auctions. Following the decision and press conference, initial analyst reviews have adjusted their forecasts for the next rate move.
• TD Securities have changed their call, pushing out the next hike from July to October, which would take the target rate to 0.75%. They await further MoF guidance on issuance plans after this Friday's primary dealer meeting. They note that dovish remarks from Ueda were taken in stride by the market, which may reflect that investors have already priced in JPY weakness. Further out, TDS expect USDJPY to resume its downtrend, forecasting USDJPY <140 by year-end as structural factors weigh on the USD in H2'25.
• ING say the Governor's remarks at the press conference suggested a reinforcement of the dovish stance. This has prompted ING to further delay their calls on the timing of the next rate hike. They now see a clear dovish leaning from the BOJ and no rate hike is expected in the third quarter of this year. They add that if underlying inflationary pressures continue to build in the coming months, the BoJ may hike in Q4.

• Bund futures have traded in a tight 34 tick range, currently -23 ticks at 130.62. Geopolitical tensions between Israel and Iran continue to dominate headline flow, with fixed income markets having to weigh up fresh inflation risks alongside weaker risk sentiment. Today’s subdued price action is somewhat suggestive of headline fatigue, until the next material development in the conflict arises.
• The recent pullback in Bunds is still considered corrective for now, with key short-term support seen at 130.12, the Jun 5 low.
• Meanwhile, US President Trump has provided renewed hawkish rhetoric with respect to a trade deal with the EU.
• German yields are 1-2bps higher, with the short-end underperforming. There was limited impact from the stronger-than-expected German June ZEW survey (expectations component 47.5 vs 35.0 cons, 25.2 prior).
• The EU is tapping the 3.375% Oct-39 EU-bond via syndication today, with a E5bln WNG transaction. The size came in at the bottom of MNI’s expected range. German also sold Green Bunds this morning, with solid results.
• 10-year EGB spreads to Bunds are biased wider, with equity risk sentiment dented by a re-escalation of the conflict in the Middle East.
• ECB’s Stournaras re-iterated previous comments, noting that we have “reached an equilibrium based on developments in inflation”. 

Few Block trades Buyers in OAT in the past 15 minutes.

• OATU5  7.92k at 123.88.
• OATU5  2.38k at 123.97.
• OATU5   960 at 123.96.