EU HICP Flash YY (May) 8.1% vs. Exp. 7.7% (Prev. 7.4%)

Reaction details (10:05)

• Following this hot inflation print, which surpassed the Reuters forecast and matched the top-end of the forecast range, modest hawkish price action has been seen in the fixed income space; though, this is within ranges as the hot print does not change the guidance from Lagarde for 25bp hikes in July and September. Although, it will likely renew calls from the known hawks for a 50bp discussion/move in the meetings ahead.

Specifically:

• 
  Bund Jun'22 fell from 152.43 to a 152.23 low, before recovering marginally; note, the earlier session trough lies at 152.08. In the 15-minutes following the release, Bund matched the mentioned 152.08 low while renewed pressure occurred in sympathy in peers - sending Gilt Sep'22 convincingly below 117.00.


• Initial choppiness but no sustained move in EUR/USD
  


• For reference, market pricing via Reuters continues to imply four 25bp ECB hikes by end-2022.

31 May 2022 - 10:00- Fixed IncomeImportant- Source: Reuters