CZK: Koruna Holds Steady

• Bund futures have retraced around 50% of Friday’s sharp selloff, currently +29 ticks at 129.09. Similar to Friday, there hasn’t been a clear headline trigger for the rally.
• A bearish threat is nonetheless present in Bunds, with resistance not seen till the 20-day EMA at 129.72.
• The German curve has bull flattened, with 5s30s down 1.3bps to 99bps after closing above 100bps for the first time in six years on Friday. Yields are 1-4.5bps lower across the curve.
• The 10-year BTP/Bund spread has tightened almost 2bps back to ~78.5bps, even as European equity futures decline 0.6% and 3m10Y EUR rates vol consolidates Friday’s 2.5bp increase.
• The 10-year IRISH/Bund spread is marginally tighter at 23bps, after Moody’s affirmed Ireland’s sovereign rating at Aa3 on Friday, and retained its Outlook as Positive. The risk was for an Outlook downgrade to Stable.
• The Euro area goods trade surplus was smaller than expected in June at E7.0bln (cons E14.5bln). The seasonally adjusted equivalent meanwhile fell to just E2.8bln vs E15.6bln in May, the lowest monthly surplus since July 2023.
• Focus turns to headline flow stemming from Ukrainian President Zelensky’s meeting at the White House later today.

Economist expectations for inflation in Germany "over the next few years are stable at 2.4 percent for 2025 and 2.3 percent for 2026 and 2028" according to an e-mailed press release with the global IFO Economic Experts Survey.

• This is noticeably above the Bundesbank expectations for these years, which are standing 2.2% for 2025, 1.5% for 2026 and 1.9% for 2027, respectively. IFO could not comment in detail on the discrepancy to us as they just collate the experts' numerical responses.
• Private sector consensus (MNI collation of 7 sellside analysts) for German CPI meanwhile stands at 2.1% for 2025, 1.7% in 2026, and 2.1% in 2027 - so more in line with the Bundesbank's view.
• A total of 1,340 economic experts from 121 countries participated in the IFO survey, which ran from June 17 to July 1 on a global level. For Germany, IFO collated expectations from around 60 economic experts.

Some activity in flies in recent trade:

• SFRZ6/M7/Z7 fly paper paid ~2.7K on -11.5.
• SFRH7/M7/U7 fly 8.5K given at -3.0.