It's rather peculiar, but the 'feeling' is diverging on both sides of the Atlantic after the publication of a Producer Price Index (PPI) in the US that disappointed expectations at all levels... but what's even more paradoxical is that T-Bonds are proving resilient, while our Treasuries are succumbing to heaviness.
The Labor Department reports that PPI rose by 0.5% on a reported basis, and by 0.4% excluding food (against an expected stability), energy and business services, in April compared with the previous month.

Over the last twelve months, producer prices rose by 2.2% unadjusted (vs. 1.8% in March) and 3.1% excluding food (vs. 2.8% in March).
This will not encourage the Fed to loosen its monetary policy any time soon: the latest statements by US central bank president Jerome Powell, speaking late this afternoon from Amsterdam (a conference organized by the Association of Foreign Banks in the Netherlands), point in this direction.
The FED boss acknowledges that "the decline is slow" and that "we'll have to be patient before the inflation data move in the right direction".
But this is not affecting T-Bonds, which are easing this evening by -2.5pts for the '10-yr' (to 4.455%) and -3pts for the '2-yr' to 4.826%.

In Europe, inflation in Germany came in at +2.2% (stable) and the ZEW index of German investor sentiment rose by 4.2 points on April to stand at +47.1, confirming that economic conditions are gradually improving in Europe's leading economy.

Bunds are up +3pts to 2.538%, our OATs are up +4pts to 3.054%, and Italian BTPs are up +3.3pts to 3.883%.

The widening yield spread on US/EU Treasuries weighs on
UK Gilts deteriorate 'at the margin' with +2Pts to 4.198%, as wages have stagnated for 3 months in the UK, defusing the price/wage spiral.


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