Fixed Income Chart Of The Day: EUR HICP front-end steepening potential

Research evidence excerpt

Fixed Income Chart Of The Day: EUR HICP front-end steepening potential

Deutsche Bank

Research

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Fixed Income Chart Of The Day 2 July 2026

EUR HICP front-end steepening potential

Markus Heider

Front-end HICP swaps have shown some resilience this week. Despite the June Macro Strategist

HICP flash estimate surprising more than 10bp below market fixings and Brent +44-20-754-52167

falling by more than 4%, 1y HICP (Apr-26 to Apr-27) has risen by 10bp from pre-

flash levels. Higher spot wholesale diesel prices may explain part of the move, but Gabriele Cozzi

Strategist broadly stable December 2026 and March 2027 diesel contracts — alongside +44-20-754-17714

broadly unchanged wholesale petrol prices — suggest only a limited impact on

1y inflation. Francis Yared

Strategist

The details of the June flash estimate showed persistent weak momentum in food +44-20-754-54017

inflation, and a marked downside surprise in services. While the latter may have

been largely due to volatile holiday prices, market fixings price a full reversal of Matthew Raskin

the surprise by September. Business survey price indicators fell in June, and +1-212-250-1741

commodity price trends point to further downside in the coming months; this

poses downside risk to core inflation forecasts. At the same time, credit data this Soniya Sadeesh

week showed continued resilience, while the announcement of income tax cuts in Strategist

+44-20-754-73091 Germany should also provide some support for medium-term inflation

expectations. In addition, the planned introduction of ETS2 in early 2028 remains Ioannis Sokos

an upside risk for inflation. Meanwhile, inflation market valuations in early 2028 Strategist

have fallen back to just below 2%. +44-20-754-75680