Bund yields: Short-covering seen shallow – Societe Generale

Societe Generale’s Kenneth Broux observes Bunds and Bonos retracing from recent yield highs despite a strong upside surprise in Spain’s CPI. The bank warns that if this inflation pattern is replicated across the Euro area, risks are skewed to an upside surprise in core HICP. Bund short-covering and yield dips are seen as potentially shallow, with topside levels at 3.70%/3.74% and support at 3.54%.

German yields may resume topside push

"With that in mind, the tentative short covering in Bunds and dip in yields across the EGB curve this morning could be shallow and and reverse."

"For the Bund, topside levels are situated at 3.70%/3.74% and support rests at 3.54%."

"Our economist Sam Cartwright points out that if this is replicated across the euro area, it would skew the risk to an upside surprise for core HICP tomorrow (SG f/c no change at 2.4% yoy)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)