Inflation - EUR
BEs nudged a little higher with a strong PPI providing a green light against an inflation-friendly/neutral backdrop. CPI is now on the horizon.
Today’s Fed TIPS purchase helped support front-end BEs but the bull flattening nominal rally weighed on longer tenors.
Traders described Euro inflation as “pretty stable” going into the close with the market lacking any particular trend or momentum.
BEs snapped back higher today after yesterday’s flow-driven hiccup. Inflationistas eye tomorrow’s Fed TIPS purchase operation.
Traders said the euro inflation market is tracking TIPS, describing HICPx as expensive and warning of squeeze risk.
BEs sellers emerge today as an energy rally lost much of its upward momentum intraday while nominal yields ground lower in the backdrop.
The euro inflation curve is trending higher with decent flattening related to month end and most action in 5 year swaps.
A surge in TIPS dulls the impact of disappointing core HICP data while traders focus on month-end. Elsewhere a big inflation-linked MTN emerges.
Oil sold off sharply despite continued Suez Canal paralysis. However, BEs ultimately ignored Black Gold and rallied nevertheless.
Traders suggest a weak Italian auction could be linked to pre-auction buying on behalf of clients.