POWER: German Spot at Highest Discount to France Since 29 Dec 2024

• In the FI space, a bear threat in Bund futures remains present and recent gains appear corrective. Key short-term support and the bear trigger to watch lies at 128.37, the Nov 20 low. Clearance of this level would resume the bear leg and open 128.25, the Oct 7 low. Key short-term resistance has been defined at 129.21, the Nov 26 high. A clear break of the average would highlight a stronger reversal and open 129.40, the Nov 13 high.
• A volatile spike higher in Gilt futures on Nov 26 resulted in a breach of some important short-term resistance points. This strengthens a bullish theme and a continuation higher would signal scope for a climb towards resistance at 92.55, the Nov 11 high. A gap in the daily chart has been filled. For bears, a stronger reversal would refocus attention on the first important support at 90.53, the Nov 26 low.

• We noted the break below 20-day EMA support earlier this morning, and that effect is being compounded by the moderate phase of risk-off into the NY crossover. The Y155.00 handle is under pressure, with support seen scant above Y153.06, the 50-day EMA.
• Ueda remains the initial trigger here, but the incoming US ISM Manufacturing data will keep focus on the USD leg in very near-term trade. We note support expected into the 98.992-99.063 area for the USD Index, which could contain any further decline in USDJPY.
• Notably, vol markets are signalling JPY is the currency in focus across December, evident in the front-end of the JPY implied vol curve being notably elevated relative to broader G10. This effect translates to the implied/realised vol ratio clearing all other currencies for maturities out to 2 years (see below):

Ireland's 0.4pp headline HICP acceleration to 3.2% Y/Y does not materially impact MNI's tracking estimate of Eurozone HICP, now standing at 2.12% Y/Y. As noted earlier, we have seen analyst estimates after last week's "big four" eurozone releases in the 2.1-2.2% Y/Y range. 

• The Y/Y acceleration in Ireland was driven by base effects, with HICP at -0.2% M/M vs -0.5% M/M in Nov 2024 (and with mixed November history further back including -0.9% M/M in 2023 and 0.2% in 2022).
• "Excluding energy and unprocessed food, the HICP is estimated to have risen by 3.0% since November 2024", the Irish statistics office comments.
• On non-core: "Energy prices are estimated to have grown by 0.7% in the month and rose by 3.3% over the 12 months to November 2025. Food prices are estimated to be unchanged in the month and increased by 4.2% in the last 12 months."
• On a broader perspective, Irish HICP continues to widen its gap to the Eurozone-wide measure after being one of the countries with the lowest readings in the bloc around late-2024.