EUROPEAN INFLATION: MNI Eurozone Inflation Preview – March 2025

• EUR/USD: Feb27 $1.0440-50(E1.2bln), $1.0470-75(E1.4bln); Feb28 $1.0396-00(E2.8bln), $1.0550(E1.6bln); Mar03 $1.0470-75(E1.0bln)
• USD/JPY: Feb27 Y150.00($1.8bln), Y151.00-05($1.2bln); Feb28 Y150.00-10($1.0bln)
• AUD/USD: Feb28 $0.6500-10(A$1.2bln)
• USD/CAD: Feb27 C$1.4200-10($1.1bln), C$1.4350($1.0bln); Feb28 C$1.4290-00($1.5bln); Mar03 C$1.4300($1.6bln)

European yields dropped Tuesday, following the lead set by US Treasuries.

• US tariff and growth concerns continued to set the  tone overnight. Another pullback in US equities and more soft US data (including consumer confidence) helped fuel the bid in Treasuries, which spilled over into Europe.
• EGBs were also aided by a pullback in European gas prices.
• ECB implied cut pricing extended 4bp for 2025 (83bp) / BOE 5bp (58bp).
• In data, the ECB's negotiated wage tracker softened to 4.1% Y/Y in Q4 (5.4% prior), with final Q4 German GDP confirming the flash estimate.
• Gilts outperformed Bunds, with both the German and UK curves leaning bull steeper.
• Despite the US-led risk-off safe haven bid, periphery/semi-core EGB spreads closed tighter on the day (European equity futures were up), albeit off the session's tightest levels.
• Wednesday's schedule includes German andFrench consumer confidence; the week's data highlights commence Thursday with Spanish flash Feb inflation (Italy, France, Germany to follow Friday - MNI's preview will be out Wednesday).

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.3bps at 2.065%, 5-Yr is down 2.1bps at 2.215%, 10-Yr is down 1.9bps at 2.458%, and 30-Yr is down 3bps at 2.723%.
• UK: The 2-Yr yield is down 5.4bps at 4.174%, 5-Yr is down 6.3bps at 4.182%, 10-Yr is down 5.5bps at 4.509%, and 30-Yr is down 5.8bps at 5.102%.
• Italian BTP spread down 1.2bps at 113bps / Greek down 1.5bps at 82.5bps 

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