EUROPEAN INFLATION: Eurozone headline HICP tracking 2.3%Y/Y with 2-way risks
Oct-01 08:18
- Ahead of this morning's flash Eurozone HICP print, we track the Y/Y print at 2.3%Y/Y with two way risks (this is higher than our estimate yesterday of 2.2-2.3%Y/Y following the 3.05%Y/Y Dutch print which came in higher than consensus).
- We think that a 2.4%Y/Y print would be a bit of a surprise, with most sell side updates sticking to their original forecasts of 2.2-2.3%Y/Y (so either 2.2% or 2.3% would be less of a surprise).
- The median estimate in the Bloomberg survey is 2.2%Y/Y but 20/44 analysts in the survey look for 2.3% (or higher) - although only 3 of these look for 2.4%Y/Y.
- We have so far received data from countries that make up 92.4% of the index.
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GILTS: Goldman Sachs: Gilt 2s5s To Steepen Further
Sep-01 08:07
Late on Friday Goldman Sachs noted that “gilts underperformed other major bond markets in August, following upside surprises to inflation and activity data”.
- They go on to write that “BoE Governor Bailey repeated the risk of inflation persistence, and the concern that low productivity growth and labour supply weakness necessitates restrictive policy. At the same time, ongoing weakening on the demand side of the labour market is a reminder of the downside skew of risks to the policy rate. We believe that disinflation in 2H25 will ultimately allow for deeper BoE cuts, but the onus is for the upcoming inflation data to give signs that inflation persistence is fading (the next inflation release comes on September 17)”.
- As a result, Goldman Sachs recommend 2s5s gilt curve steepeners given their base case for “deeper cuts, as well as the possibility that terminal rate expectations may be revised higher if data remains resilient”.
- Furthermore, their model suggests 2s5s screens flat vs. macro factors.
AUD: FX Exchange Option
Sep-01 08:07
FX Exchange traded Option, Risk Reversal:
- AUDUSD (5th Dec) 64/67.5RR, bought the put for 0.17 in 1k.
Doesn't cover the last RBA 9th December meeting for this Year.
MNI: EUROZONE AUG MANUF PMI 50.7 (50.5 FLASH, 49.8 JUL)
Sep-01 08:00
- MNI: EUROZONE AUG MANUF PMI 50.7 (50.5 FLASH, 49.8 JUL)
