TURKEY: Simsek Sees Hitting Inflation Target as "Difficult" This Year

• Ahead of this morning's flash Eurozone HICP print, we track the Y/Y print at 2.3%Y/Y with two way risks (this is higher than our estimate yesterday of 2.2-2.3%Y/Y following the 3.05%Y/Y Dutch print which came in higher than consensus).
• We think that a 2.4%Y/Y print would be a bit of a surprise, with most sell side updates sticking to their original forecasts of 2.2-2.3%Y/Y (so either 2.2% or 2.3% would be less of a surprise).
• The median estimate in the Bloomberg survey is 2.2%Y/Y but 20/44 analysts in the survey look for 2.3% (or higher) - although only 3 of these look for 2.4%Y/Y.
• We have so far received data from countries that make up 92.4% of the index.

German VDMA machinery orders were weak in August, with a decline of 7% Y/Y, with domestic orders down 5% and foreign orders down 8%. "There was a very clear divergence: while orders from eurozone partner countries increased by 12 percent, orders from non-eurozone countries fell by 15 percent. [...] US tariffs are increasingly leaving their mark", VDMA concludes.

• On a longer-term comparison: "In the less volatile three-month period from June to August 2025, companies recorded a total decline in orders of 2 percent in real terms."
• The German Final September Manufacturing PMI was also released this morning, drawing a rather negative picture: "Expectations slip to nine-month low as new orders post renewed decline".
• Full German factory orders data for the month of August is scheduled for release next Tuesday, October 7.

The EUR 10s30s swaps curve has consolidated in the low 20s in recent sessions after registering a cycle closing high of 28.2bp in early September.

• Dutch pension flows remain front and centre when it comes to long end swap-related discussions.
• While the Dutch move to defined contribution from defined benefit pension plans continues to present medium- to long-term steepening risks for the long end, the risks are not overwhelmingly skewed in that direction in the more immediate term.
• Commerzbank note that the recent pullback from multi-year highs on the EUR 10s30s curve gives rise “to speculation of steepener unwinds ahead of year-end as the transition to the defined contribution is not happening as quickly as some speculators may have thought”.