IFR Euro Outlook: Italy auctions after deficit forecasts and German/Spanish inflation while oil soars

OVERNIGHT

Watch the price of oil was the lesson yesterday, if not so many other sessions too. Brent crude is up another $0.79 at $97.34, after soaring more than $2.50 yesterday past its September 19 high. It is now the highest it has been since July 2022, and is showing no signs of slowing down.

Nordrhein-Westfalen inflation has also just come out and eased to +0.2% m/m and +4.2% y/y, from +0.5% and +5.9%. This fits with the bigger picture of easing German inflation on a national scale, as described below.

Bunds have jumped ? point on the news, but are still slightly lower from Wednesday’s settle after sliding into and after their close while oil took off.

It’s the same story for Treasuries, where 10-year futures are up ? point from their settle, but are still down ? point from Europe’s close.

And there is one more big piece of news as Italy announced a deficit projection of 4.3% for 2024, and revised this year’s deficit to 5.3%. These are certainly big numbers, but do also fit with what was leaked to Reuters earlier in the week. So they shouldn’t surprise, but they may still weigh on the market as they reflect a deteriorating fiscal picture.

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