European Bond Market Preview 3/27

- European government bonds closed lower in yesterday’s session after firming earlier on upon the release of stronger than expected home sales data in the US.
- The EU’s Juncker said yesterday that European economic growth remains strong and is spreading. The EU’s Almunia also commented, reiterating that wage gains should reflect productivity.
- CPI from the German state of North Rhine-Westphalia rose to 0.5% m/m in March from 0.4% in February, and 1.8% y/y in March from 1.65 in February. NRW was the first of the state CPI figures from Germany. The Saxony and Baden Wuerttemberg CPI figures are due to be released today.
- In focus today will be the German IFO data for the month of March. The IFO business climate is expected to fall to 106.5 from 107.0 in February, while the current assessment is expected to fall to 111.0 from 111.6, and expectations is expected to fall to 102.3 from 102.6.
- Additional focus will fall upon comments from the EU Finance ministers, as well as the Fed’s Pinalto who is scheduled to speak in Prague at 5:00 ET. In new supply focus will fall upon results from the Italian auction. Italy is set to sell €2.09B in two-year zero-coupon bonds; results are due just after 5:00 ET.
- Gilts also closed lower in the UK after gaining a boost from stronger than expected home sales data in the US.
- The Bank of England’s Gieve spoke yesterday, but did not mention economic policy.
- In focus today will be comments from the BOE’s King, Lomax, and Sentance, who are set to attend a treasury committee hearing and speak on inflation.
- Also in focus today will be the results from the DMO gilt auction. The DMO is set to sell £950M in 1.25% I/L bonds due in 2027; results are expected just after 5:30 ET.