Inflation - EUR
BEs adopted a newfound attitude after the Fed ruined the day yesterday, lending solid support to today’s $14bn 10y TIPS reopening.
The Fed/Powell’s more decisive taper talk at today’s FOMC decision scared BEs lower amid better RY selling. 10y TIPS auction now eyed.
Risk sentiment stabilized after yesterday’s scare but BEs were sticky today, reluctant to join the modest risk-on move despite the Fed’s help.
Summing up this historic day in his market, one seasoned basis swapper said the transition to RFRs will make regulators happy. If that is possible.
The start to the week includes covered bond issuers, Atlantic islands and NGEU's discussions with dealers before next week's first auction.
The BEs curve steepened with tenors beyond the very front-end getting a modest bump higher amid many cross-currents.
Front-end inflation lingers near recent highs while strategists highlight the curve is back at Lehman extremes.
The August CPI print missed the mark at most points - but not shockingly so – with BEs unsurprisingly bear steepening post data.
Euro inflation finally came under pressure and took a tumble today.
BEs sulk a tad on the eve of CPI as fast money sellers took advantage of recent strength.