Sovereign debt yields and with that bond premium have started to discount that Inflationary pressures in CPI and PPI are going to become a structural feature of economic growth. In fact, also in price stability Germany, consumer inflation CPI 5.3% and HICP 5.7% are concrete data of substantial price and production costs inflation in the German economy, while overall energy prices on a global footprint are going to steadily increase; in so far all the concrete data have convinced stock markets and financial institutions that inflationary pressures are going to increase and to hold above average for some time going forward.
The short term debt maturities of the Bund yield curve are going to be repriced in line with actual inflation data and 5-Year inflation expectations averaging 4.2%, according to the Bundesbank data, thereby there are entrenched inflationary expectations built in the German economy that consumers have been already factoring.
The Euro-Schatz Futures have started the January candlestick with an opening gap lower starting to price below the IKH Senkou A/B nuage, which signals a slow drifting in sovereign debt markets to reprice the premia of the short term maturities issuances, given the diametrically opposed inflationary data incoming from the economy. The Euro-Schatz price can be repriced to €110.95 with a yield that would be still very negative of -0.41%, but however in line with the Euribor rates.