Front-End EUR Breakevens Face Negative Carry on a Big HICP Drop
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
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UUID: 7947283
(Bloomberg) -- Euro-area front-end breakevens may face negative carry in July given the likely large fall in HICPxT for May, Bloomberg strategist Tanvir Sandhu writes.
- Euro-area May flash HICP (due at 10:00am London time) will likely fall due to negative energy price inflation and payback from last month’s gains in services price inflation
- Both headline and core prints may fall more than consensus given downward surprise to German and Spain yesterday
- NOTE: Bunds remain contained with the dominant valuation drivers not gaining traction, which may encourage core alpha strategy of selling volatility at record speed on any spikes; inflation has likely peaked and recent dovish ECB speak on sequencing has prevented sell-off in the short end, see more here
- NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
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UUID: 7947283