HALISTER1: EUR Inflation Carry to Turn Highly Positive Over May: Citigroup

EUR Inflation Carry to Turn Highly Positive Over May: Citigroup

(Bloomberg) -- Expect EUR inflation carry to be significant over May and further enchanced with any upside final HICP suprise today, Citigroup strategists including Jamie Searle write in client note.
  • Expect HICP release for March at 11am CET likely to confirm the flash reading of -0.1% y/y, up from -0.2% in Feb
  • Consistent with HICPxT of 1.2% m/m, according to Citi’s economists
  • Reading will result in significantly positive carry over May, Boblei18 +60bp
  • Minor upside risk to inflation following yesterday’s surprise in France CPI
  • An upside surprise of 0.1% m/m in HICPxT will enhance the carry on Boblei18 by 5.3bp over May
  • Pricing this in, along with further gains in oil prices, has perhaps contributed to recent flattening of the breakeven inflation curve
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Jamie Searle (Citigroup Inc)

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