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Bund yields seen retracing from highs after Spain CPI upside surprise

Societe Generale flags a risk of an upside surprise in core euro area HICP if Spain’s inflation pattern holds, keeping prospects for Bund short covering and yield dips potentially shallow.

Reported · Written up by our desk · Major Pairs

Societe Generale, via analyst Kenneth Broux, said German Bunds and Spanish Bonos are retracing from recent yield highs despite a strong upside surprise in Spain’s CPI, according to FXStreet.

The bank warned that if Spain’s inflation pattern is replicated across the euro area, risks are skewed toward an upside surprise in core HICP, which could limit the scope of any pullback.

FXStreet also highlighted that Bund short covering and recent yield dips could be relatively shallow, with topside levels cited at 3.70% to 3.74% and support at 3.54%.

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