EUROPEAN INFLATION: HICP Tracking Remains Around 0.1pp Below Consensus
Jan-07 09:48
- Incorporating Dutch (2.48% Y/Y) and Austrian (3.9%) December HICP into our tracking estimate for Eurozone headline HICP, we still see risks skewed to the downside to the 2.0%Y/Y consensus (our unrounded tracking is currently at 1.92%), with Germany's surprisingly soft 2.0% Y/Y yesterday vs consensus 2.2% playing a sizeable role.
- Italian figures are the main remaining piece and can surprise in both directions, to be released simultaneously alongside the bloc-wide reading.
- A more material downside would be needed over the coming months to put any ECB cut discussions back on the table again.
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EGB OPTIONS: More downside via Bund Options
Dec-08 09:40
- RXG6 128.5/127.5/126 broken p fly, bought for 7.5 and 8 in 3.5k total.
A lot of activity in Bund Options this past Week, mostly all downside following the Hawkish repricing in the Euribor strip.
BONDS: Japanese Investors Remain a Reliable Source Of Gilt Demand
Dec-08 09:30
Japanese demand for Gilts has been steady through the last two years despite ongoing fiscal uncertainty. Japanese investors net purchased JPY418.6bln of Gilts in October, according to Balance of Payments data released overnight, the largest single month of net buying since January 2021.
- The Gilt curve saw a marked shift lower in October, a combination of dovish UK labour market and inflation data, slightly better-than-expected fiscal figures, and cautious optimism ahead of the November Budget. Budget-related news flow drove volatility in Gilts through November, and it will be interesting to see if this curtailed the streak of net purchases from Japanese investors.
- Elsewhere, Japanese investors were net sellers of German and French debt in October. Net sales of German debt were JPY428.5bln, with year-to-date inflows now essentially flat. Meanwhile, the JPY575.7bln of net sales of French debt was the largest since October/November 2024.
- Japanese investors made negligible net purchases of US debt in October, but year-to-date inflows still total almost JPY6.5trln.
EGB OPTIONS: Downside interest via Bund Options
Dec-08 09:26
- RXG6 128.5/127.5/126 broken p fly, bought for 7.5 in 2k.
- RXG6 127.50/126.50ps 1x1.5, bought for 16 in 3k.
