EUROPEAN INFLATION: Package Holidays Behind Higher Services HICP In November

10-year Bund yields are down ~1.5bps today but remain just above the 2.70% figure for now. With this week’s Eurozone data calendar backloaded (flash PMIs and Q3 negotiated wages are due Friday), Bund yields will likely take cues from global FI peers and broader risk sentiment in the coming sessions. Nvidia’s earnings on Wednesday will be watched across global markets. 

• Bund futures are +7 ticks at 128.73. A bear cycle remains in play, with RXZ5 having pierced support at 128.52 (76.4% retracement of the Sep 25 - Oct 17 bull leg) this morning. A clear break of this handle would signal scope for an extension towards 128.25, the Oct 7 low.
• BTPs outperform in the EGB space, with the 10-year spread to Bunds down 1.5bps to ~73.5bps. The OAT/Bund spread is marginally wider, with lingering political/fiscal risks holding French paper back versus peers.
• No material outperformance for GGBs on the back on Fitch's expected ratings upgrade on Friday (10-year GGB/Bund spread -1bps at ~61.5bps at typing).
• Italian final October HICP inflation confirmed flash estimates at 1.3% Y/Y.
• The European Commission’s Autumn forecasts saw 2026 inflation revised up to 1.9% (vs 1.7% prior), and GDP revised down to 1.2% (vs 1.4% prior).
• Canadian inflation headlines today’s North American data calendar, with any more details on US data releases following the Government reopening also in focus. 

The European Commission's Autumn economic projections see the inflation outlook up slightly from its earlier forecasts in the Spring. 

• Headline euro area inflation is now projected to decline from 2.1% in 2025 to 1.9% in 2026 and edge up again to 2.0% in 2027 (Spring forecast: 2.1% 2025, 1.7% 2026), although "on a quarterly basis, inflation is set to hover around the ECB’s 2% target throughout the forecast horizon," the Commission said.
• The forecasts assume that ETS2 will come into force in 2027, despite the Nov 5 decision of EU states to suspend the trading scheme for a year to 2028, a decision which the European Parliament has subsequently approved. ETS2 is estimated to lift consumer energy prices over the course of 2027 by around 3% in the euro area, with the ECB expecting it to add about 0.3pp to headline inflation in 2027 under actual current legislation.
• Driven by stronger-than-expected growth over recent quarters, the Commission also expects GDP growth of 1.3% in 2025, 1.2% in 2026, and 1.4% in 2027 (Spring forecast: 0.9% 2025, 1.4% 2026), noting that growth has proved resilient even after front-loading effects ahead of US tariffs effects have been taken into account.
• The forecasts have a cut-off date on all assumptions of October 27.
• Full forecast table below (source: EC)

A sell-off in WTI futures on Nov 12 strengthens a bearish theme. A continuation lower would pave the way for a move towards key support and the bear trigger at $55.96, the Oct 20 low. Clearance of this level would confirm a resumption of the downtrend. Note that it is still possible a bullish corrective cycle remains in play. Resistance to watch is $62.59, the Oct 24 high. Clearance of this hurdle would signal scope for a stronger correction. Gold is trading below last week’s high. The downleg between Oct 20 and 28, appears to have been a correction and has allowed an overbought condition to unwind. Recent gains suggest that correction is over. Key support lies at the 50-day EMA, at $3927.5. Clearance of this EMA would signal scope for a deeper retracement. For bulls, a resumption of gains would pave the way for a test of $4381.5, the Oct 20 high and bull trigger.

• WTI Crude down $0.43 or -0.72% at $59.67
• Natural Gas down $0.08 or -1.71% at $4.49
• Gold spot down $0.54 or -0.01% at $4083.58
• Copper down $2.05 or -0.4% at $504.1
• Silver up $0.47 or +0.93% at $51.0467
• Platinum up $5.44 or +0.35% at $1550.71