Total Derivatives

Inflation - EUR

BEs cruised into today’s $15bn 10y TIPS tap with a bid and shot even higher the strong results. But then BEs got hit amid today’s bearish sentiment.

A round-trip for FRF inflation, bear-steepening in USTs ahead of the TIPS auction and upcoming Italian supply were all cited by traders today.

A small, squeezed French linker auction saw cash and swaps head upwards today before weakness in energy pared the surge back.

Euro inflation rebounded amid higher energy prices and stronger-than-forecast US CPI data.

BEs detested the hawkish double-whammy of a record ECB rate hike and Powell hawk talk despite an otherwise favorable backdrop.

Strategists debate the likely peak in interest rates and whether the ECB is taking enough action.

Early hawkish comments from Fed’s Mester failed to derail nominals and risk sentiment today but much weaker energy knocked out BEs.

Today saw a sharp reversal in euro inflation with the front-end moving lower as energy prices retreated.

Weaker energy prices continued to weigh on front-end BEs, already battered by recent selling flows amid illiquid conditions.

Falling energy and bad positioning helped to drive bear-steepening in euro inflation today, with near-consensus HICP data unhelpful.

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