MIDEAST: IAEA Confirms Iranian Centrifuge Production Sites Hit
The International Atomic Energy Agency (IAEA) posts on X: "The IAEA has information that two centrifuge production facilities in Iran, the TESA Karaj workshop and the Tehran Research Center, were hit. Both sites were previously under IAEA monitoring and verification as part of the JCPOA. At the Tehran site, one building was hit where advanced centrifuge rotors were manufactured and tested. At Karaj, two buildings were destroyed where different centrifuge components were manufactured."
- Centrifuges arranged in cascades are the key components that allow the enrichment of uranium from low-purity (used for civil nuclear power production) to high-purity weapons-grade.
- Comes as Sky News Arabia reports an Israeli army spox saying "We have clear goals, which are to remove the existential threat to Israel". Says that Iran has "thousands" of missiles, and that "tolerance is not an option".
- For the moment, it appears the likelihood of Israel engaging in any de-escalatory talks are slim, with the comprehensive elimination of Iran's nuclear enrichment programme seen as a major long-term security objective, rather than simply setting Tehran's programme back several years or risking another repeat of the JCPoA.
- i24 reports that another wave of Israeli airstrikes are underway, with social media reports claiming multiple explosions heard in Tehran.
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EGBS: UST Spillover and Heavy Issuance Weighs On Major EGB Futures
Spillover from US Treasuries and a heavy morning of corporate/sovereign supply has weighed on major EGB futures, with Bunds down 61 ticks at 129.81. Key support remains at 129.13, the May 15 low.
- Reaction to Moody’s US sovereign rating downgrade late Friday has set the tone across global markets. with USD FX and rates under notable pressure.
- In Europe, today’s new 7-year E3bln WNG EFSF syndication comes alongside auctions from Slovakia and the EU (1030BST), as well as several corporate deals.
- The German 5s30s curve is up 2bps on the sesion to ~90bps, seeing a more modest intraday steepening than UST counterparts (+4.2bps to 89bps).
- 10-year EGB spreads to Bunds have generally widened, with the US downgrade dampening global equity sentiment. The BTP/Bund spread has widened 1.5bps to 102bps, after hovering around the psychological 100bp handle through last week.
- Rounded Eurozone HICP headline / core inflation was unrevised in the final April release at 2.2% Y/Y and 2.7% Y/ respectively. Services inflation was upwardly revised by 5 hundredths to 3.98% Y/Y (highest since August 2024), bringing the rounded rate to 4.0%.
- The European Commission has significantly downgraded its Euro Area's growth and inflation outlook due to the weaker global trade environment as well as the continuing uncertainty surrounding US tariff policy.
SLOVAKIA AUCTION RESULTS: SlovGBs
| Coupon | 3.00% | 3.00% | 3.625% | 3.75% |
| Maturity | Feb-28 | Nov-31 | Jun-33 | Feb-35 |
| Instrument | SlovGB | SlovGB | SlovGB | SlovGB |
| ISIN | SK4000024683 | SK4000026241 | SK4000023230 | SK4000022539 |
| Amount | E136mln | E146mln | E204mln | E121mln |
| Previous | E77mln | E2bln | E114mln | E255mln |
| Avg yield | 2.295% | 2.990% | 3.322% | 3.474% |
| Previous | 2.082% | 3.040% | 3.407% | 3.437% |
| Bid-to-cover | 2.20x | 2.67x | 2.44x | 3.64x |
| Previous | 2.78x | 2.30x | 2.38x | |
| Avg Price | 101.832 | 100.046 | 102.108 | 102.237 |
| Low Price | 101.810 | 99.977 | 102.013 | 102.220 |
| Pre-auction mid | 101.936 | 99.928 | 102.063 | 101.953 |
| Prev avg price | 102.461 | 99.751 | 101.529 | 102.568 |
| Prev low price | 102.400 | 101.460 | 102.450 | |
| Prev mid-price | 102.360 | 101.384 | 102.448 | |
| Previous date | 22-Apr-25 | 29-Oct-24 | 17-Mar-25 | 22-Apr-25 |
EUROPEAN INFLATION: EZ Services Inflation Upwardly Revised in April Final Data
Rounded Eurozone HICP headline / core inflation was unrevised in the final April release. On an unrounded basis, headline came in at 2.17% (2.16% flash) after 2.18% in March. Core meanwhile was 2.75% (2.72% flash, 2.43% in March). In terms of contributions vs March, services adding 0.24pp was broadly outweighed by energy taking away 0.25p, while FAT and NEIG contributions were broadly unchanged.
- Services inflation was upwardly revised by 5 hundredths to 3.98% Y/Y (highest since August 2024), bringing the rounded rate to 4.0% - the highest since December 2024 (3.93% flash, 3.45% March). Despite the material April uptick (even the 3.93% flash reading was above all analyst estimates), general consensus is for services inflation to tick down again in the months to come.
- Recall that seasonally adjusted sequential services inflation accelerated in flash March data to 0.67%, the highest since the 0.91% seen in September 2022 and pushed 3m/3m services inflation momentum to an 8-month high of 4.08% (vs 3.31% prior) as it somewhat looks to repeat last year's pattern amidst both Easter Effects and residual seasonality concerns. We'll update latest trends here when the ECB updates its seasonal data later today.
- Other categories meanwhile looked mixed:
- Energy was downwardly revised to -3.56% (-3.47% flash, -0.98% March).
- Food, alcohol & tobacco (FAT) was little changed at 2.97% (3.00% flash, 2.93% March).
- Non-energy industrial goods (NEIG) came in at 0.57% (0.58% flash, 0.62% March).
