EU HEALTHCARE: Healthcare: Week in Review

The German 5s30s curve has retraced around 60% of the early December flattening, keeping an underlying steepening theme intact. The curve is back above 100bps at 102.4bps, up just over 1bp on the session.  Tomorrow’s Eurozone risk events will be key for the direction of the spread into year-end, with the front of the curve eyeing the ECB decision and press conference, and the mid/long-end cognisant of Germany’s 2026 issuance plan. 

• Intraday, the curve has twist flattened, with 2-year yields down almost 1bp after spillover from the softer-than-expected UK inflation report this morning.
• An uptick in crude oil futures on reports that the US is preparing fresh sanctions on Russia if Putin rejects the Ukraine peace deal (alongside overnight developments in Venezuela) looks to have helped yields away from session lows.
• Bund futures are + 7 ticks at 127.63, down from earlier highs of 127.79. Initial resistance at 128.08 (Dec 8 high) remains untested.
• 10-year EGB spreads to Bunds are little changed on the session.
• Eurozone final November core HICP inflation confirmed flash estimates at 2.41% Y/Y (vs 2.37% prior). The German December IFO survey was weaker-than-expected, led by the expectations component. 

Figure 1: German 5s30s (Source: Bloomberg Finance L.P)

• The US dollar trades with a much more constructive tone on Wednesday, prompting a near 0.8% recovery for the DXY from the post-NFP lows. It appears the limited market shift in rates expectations has frustrated the weakening dollar trend into the release, with short-term positions potentially getting squeezed ahead of tomorrow’s US CPI release.
• Lower-than-expected UK CPI has weighed on GBP, pressuring cable down to 1.1312 session lows. It’s not pricing for tomorrow's BoE decision that’s shifting spot markets, but policy differentials further down the curve. With tomorrow’s BOE rate cut well priced, the vote split will be in focus. Today’s inflation print could potentially tilt that to 6-3 – a dovish signal that could usher in easier pricing still for next year as the committee would look more proactive on downside inflation surprises.
• For GBPUSD, support sits at 1.3290, the 50-day EMA. A breach of this EMA would highlight a bearish development and signal a possible reversal. To the upside, attention is on 1.3452 (pierced), a Fibonacci retracement. In EURGBP, 0.8802-10 could provide intraday resistance, but a close above this mark today would open gains toward November’s 0.8865 high.
• USDJPY stands a notable 110 pips above yesterday’s lows at 155.50. Spot traded to within 5 pips of the Dec 05 lows of 154.35 yesterday, bolstering the significance of this area of support ahead of the US data and the BOJ on Friday. Furthermore, the 50-day EMA has also held, intersecting just above the 154.00 handle. A clear breach of this average is required to undermine the bull theme and signal scope for a deeper corrective pullback.
• Weekly MBA mortgage applications and September housing starts highlight the US data calendar before focus turns to tomorrow's central banks, with the Riskbank, Norges Bank, BOE and ECB decisions all due. 

OEG6 117.5 ^, bought for 142 in 2k.