Inflation Data Could Stoke Volatility in Eurozone Government Bond Markets

0628 GMT – Inflation data from France and Italy hold more volatility in store in eurozone government bond markets this morning, Christoph Rieger, head of rates and credit research at Commerzbank, says in a note. The eurozone harmonized index of consumer prices, or HICP, looks set to confirm that the headline rate has dropped swiftly, but that the core rate—which excludes energy and food prices—increased to a new record high, he says. Economists in The Wall Street Journal’s poll expect eurozone core inflation to rise to 5.7% in March from 5.6% in February; Commerzbank’s economists also expect 5.7%, Rieger says. The 10-year German Bund yield is trading almost 2 basis points lower at 2.340% and 10-year bond yields of other eurozone countries also drop, according to Tradeweb. (emese.bartha@wsj.com)

Eurozone Government Bond Markets to Focus on Fundamentals

0615 GMT – Eurozone government bond market focus now turns to fundamentals which show no imminent risk of a crisis but remain gloomy, Societe Generale rates strategists write in a note. This outlook could favor smaller eurozone government bond markets versus bigger ones, enabling them to outperform. “The rising interest costs particularly for Italy will linger and restrain any large-scale spread narrowing,” the French bank’s strategists say. (emese.bartha@wsj.com)