Bond yields rose yesterday on both sides of the Atlantic, more so in the US than in the Euro zone. Curves saw some steepening pressure. Intra-Euro-zone bond spreads mostly widened.
The move higher in yields should have some more to go today.
The Eonia overnight rate continued to climb, hitting 40bp, the highest number since late 2011, excluding the last day of 2013 and end of Q1 2014. Money market tensions thus continue to build, making this week’s refinancing operations increasingly interesting (see more below).
Equity markets closed with modest gains, as US equities also recovered their earlier losses (S&P 500 closed higher by 0.32%). Asian equities are trading mostly lower this morning, but Europe is set to open slightly up.
US pending home sales offer hope for the US housing market
The US pending home sales index rebounded by 3.4% m/m in March after eight consecutive months of declines. This still leaves sales 12% lower compared to last year’s peak, but offers at least hope the downward pressure on sales would be easing.
All eyes on German inflation numbers and Euro-zone liquidity developments
The highlight in today’s calendar will be the preliminary German April inflation numbers at 14:00 CET, giving guidance to tomorrow’s Euro-zone numbers. Data from the states will start flowing in at 9:00 CET. Signs of a clear rebound would put upward pressure on yields.
The Euro-zone data calendar looks quite interesting in general as well. The March money and credit growth numbers will be released at 10:00 CET and the economic sentiment indicator at 11:00 CET. In the UK, Q1 GDP numbers will see daylight at 10:30 CET. The French parliament, in turn, is scheduled to vote on the spending cuts proposed by Mr Hollande.
In light of the clearly increased money market tensions, the results from the ECB’s main refinancing operation at 11:15 CET will gather plenty of interest as well. As a reference, the maturing amount will be around EUR 122bn. A fuller picture of the liquidity changes will become clear only tomorrow, however, when we hear the results of the latest 3-month refinancing operation.
In the US, the February S&P / Case-Shiller house price data will be released at 15:00 CET and the consumer confidence by Conference Board at 16:00 CET.
Italy to sell 5- and 10-year bonds
Italy will set this week’s Euro-zone bond auctions in motion today, when it will sell 5-year bonds for EUR 2.75 to 3.5bn, 10-year bonds for EUR 2.5 to 3bn and 5-year floaters for EUR 1.75 to 2.5bn. The results will be out at around 11:10 CET.
Nordea