French and Spanish Inflation Undershoot, Backing ECB Cuts.

 Inflation in France and Spain undershot expectations, supporting calls for more interest-rate cuts by the European Central Bank.

Consumer-price growth held steady at 0.9% in France this month, defying analyst predictions for an uptick. In Spain, they slowed to 2.2% — a much deeper deceleration than expected — and are now approaching the ECB’s 2% target.

European bonds held onto earlier gains. Germany’s 10-year yield was six basis points lower at 2.71%, with the equivalent French and Spanish rates posting a similar drop. Traders added slightly ECB rate-cut bets for this year, pricing 60 basis points in total. That’s equivalent to two quarter-point reductions and a 40% chance of a third.

Friday’s data provide an early indication of price momentum in Europe this month, before publications from other major member-states, plus the currency bloc itself, next week.

Source: Finance.Yahoo