BUNDS: Steepening Extends A Little
Aug-09 11:49
The steepening of the German cash curve has extended a little.
- Bund futures sit a little above session lows, -30, after yesterday’s high capped an early uptick. The contract has found a bit of a base in recent trade.
- The major German cash bonds run 0.5-3.5bp cheaper.
- Factors impacting today’s price action include tepid demand at the latest round of 10-Year German supply, an uptick in European equities (although that move has moderated from best levels) and firmer benchmark energy prices.
- It is worth noting that EUR 5y5y inflation-linked swaps have nudged lower on the day, even as core energy markets firm. The metric remains above 2.60%, a little shy of the recent cycle peak.
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US TSY FUTURES: BLOCK, Sep'23 2Y Sale
Jul-10 11:47
- -2,500 TUU3 101-18.5, sell through 101-18.75 post-time bid at 0736:56ET, 101-18.88 last (+1.62)
OPTIONS: Larger FX Option Pipeline
Jul-10 11:45
- EUR/USD: Jul11 $1.0780-00(E2.1bln), $1.0890-00(E1.5bln); Jul12 $1.0780-00(E2.5bln); Jul13 $1.0860-80(E1.5bln)
- USD/JPY: Jul13 Y142.00($1.3bln)
NORGES BANK: Nomura See CPI Report as Less Hawkish Than Initially Appears
Jul-10 11:42
- Nomura write that the CPI release supports their forecast that Norges Bank will hike three more times by 25bp bringing its policy rate to a terminal level of 4.50%. They write that the rise in recreation and culture price inflation is concerning because this is less volatile and is affected more by wage dynamics in the economy.
However, they add a number of reasons why the inflation release may not be as hawkish as the headlines suggest:
- The upside surprise was driven largely by volatile food price inflation, and the NB discuss ex-food price measures in their MPR.
- Services price inflation was flat, consumer goods inflation clearly on disinflationary path.
- Seasonally-adjusted inflation for clothing, miscellaneous goods & services, household goods and hospitality only contributed marginally to inflationary momentum.
