EUROPEAN INFLATION: MNI Eurozone Inflation Preview – March 2025
Mar-27 17:33
We've published our preview of the Eurozone March flash inflation round - link here.
- The Eurozone March flash inflation round is spread across two weeks, with the Eurozone-wide print coming in next Tuesday, April 1. Analyst forecasts compiled by MNI point to headline around 2.2% Y/Y and core around 2.5% Y/Y.
- The upcoming April 17 ECB decision is the most uncertain since last October. The step change in the Eurozone (particularly German) fiscal outlook has added a medium-term upside risk to inflation, while US tariff policy remains a considerable source of uncertainty. Meanwhile, the March ECB policy statement described policy as “meaningfully less restrictive”, an early sign that the pace of easing may start to slow in the coming months.
- Despite this, markets continue to tilt in favour of a 25bp April cut (ECB-dated OIS assign a ~70% implied probability of this outcome), with the March flash PMIs signalling a deterioration in services sentiment and a number of ECB speakers providing dovish leaning comments.
- This sets the scene for an important flash inflation round in March. Expectations are for services disinflation to continue after February’s pullback to 3.7% Y/Y, and a realisation of such a dynamic would provide further support to an April cut. Services inflation is expected to ease on a combination of base effects (due to this year’s Easter holiday timing) and a weaker underlying momentum. We see sell side analysts expectations to centre around 3.5% Y/Y for the category – which would be the lowest rate since June 2022.
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OPTIONS: Larger FX Option Pipeline
Feb-25 17:28
- EUR/USD: Feb27 $1.0440-50(E1.2bln), $1.0470-75(E1.4bln); Feb28 $1.0396-00(E2.8bln), $1.0550(E1.6bln); Mar03 $1.0470-75(E1.0bln)
- USD/JPY: Feb27 Y150.00($1.8bln), Y151.00-05($1.2bln); Feb28 Y150.00-10($1.0bln)
- AUD/USD: Feb28 $0.6500-10(A$1.2bln)
- USD/CAD: Feb27 C$1.4200-10($1.1bln), C$1.4350($1.0bln); Feb28 C$1.4290-00($1.5bln); Mar03 C$1.4300($1.6bln)
BONDS: EGBs-GILTS CASH CLOSE: Rally Fuelled By US Risk-Off
Feb-25 17:25
European yields dropped Tuesday, following the lead set by US Treasuries.
- US tariff and growth concerns continued to set the tone overnight. Another pullback in US equities and more soft US data (including consumer confidence) helped fuel the bid in Treasuries, which spilled over into Europe.
- EGBs were also aided by a pullback in European gas prices.
- ECB implied cut pricing extended 4bp for 2025 (83bp) / BOE 5bp (58bp).
- In data, the ECB's negotiated wage tracker softened to 4.1% Y/Y in Q4 (5.4% prior), with final Q4 German GDP confirming the flash estimate.
- Gilts outperformed Bunds, with both the German and UK curves leaning bull steeper.
- Despite the US-led risk-off safe haven bid, periphery/semi-core EGB spreads closed tighter on the day (European equity futures were up), albeit off the session's tightest levels.
- Wednesday's schedule includes German andFrench consumer confidence; the week's data highlights commence Thursday with Spanish flash Feb inflation (Italy, France, Germany to follow Friday - MNI's preview will be out Wednesday).
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.3bps at 2.065%, 5-Yr is down 2.1bps at 2.215%, 10-Yr is down 1.9bps at 2.458%, and 30-Yr is down 3bps at 2.723%.
- UK: The 2-Yr yield is down 5.4bps at 4.174%, 5-Yr is down 6.3bps at 4.182%, 10-Yr is down 5.5bps at 4.509%, and 30-Yr is down 5.8bps at 5.102%.
- Italian BTP spread down 1.2bps at 113bps / Greek down 1.5bps at 82.5bps
MNI EXCLUSIVE: Conference Board Senior Economist On Sharp US Confidence Drop
Feb-25 17:21
MNI interview Conference Board senior economist on sharp drop in confidence -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
