German Bavaria CPI (Sep YY) 3.2% (Prev. 2.9%)

A re-acceleration of this kind in a major state raises the hurdle for a soft national print later in the day, and the established pattern is for the front end of the euro curve and EUR to respond to the national release rather than to any single state, unless the states point unanimously in one direction. The transmission channel runs through ECB pricing: upside surprises in German inflation have historically steepened the perceived bar to near-term easing, felt most directly in Schatz and the front of the EONIA curve. Worth observing is whether the remaining state prints confirm the acceleration and whether it is broad-based or driven by energy base effects, which the ECB has historically looked through. The Deere tag on this item appears spurious and carries no read-across.