GILTS: 2-Year Yields Hit Lowest Of '25, 10s Near Next Key Level
May-01 09:32
Weakness in crude oil futures and spillover from the JGB rally that followed the BoJ decision & press conference provide support for gilts this morning.
- Futures last 93.70 vs. session highs of 93.86.
- The contract has traded at the highest level seen since April 7, with the recent bullish phase extending further.
- Our technical analyst’s next resistance level of note is located at 94.00.
- Yields little changed to 1bp lower across the curve.
- 2s have printed the lowest level since September ’24, sub-3.80%. Next yield support seen at 3.761%.
- 10-Year yields traded as low as 4.419%, with uptrend support drawn off the December 8 ’21 low located at 4.415% today.
- GBP STIRs off dovish session extremes as gilts are off highs.
- BoE-dated OIS showing 96bp of cuts through year-end after testing April extremes of 97bp.
- SONIA futures 0.5-2.5 higher. April highs are intact across much of the strip, although there are some exceptions in the greens.
- Much of Europe is observing the Labour Day holiday, reducing the potential sources of market catalysts and limiting liquidity/trading activity at this stage.
- Expect headlines out of the U.S. to drive things for much of the day, with continued focus on the tariff/global trade backdrop, while the ISM manufacturing survey and weekly jobless claims readings present the highlights of the macro data calendar.
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EURIBOR OPTIONS: Put spread buyer
Apr-01 09:21
ERK5 97.75/97.6875ps, bought for 1.25 in 6k.
EUROPEAN INFLATION: Services Deceleration Continues in March EZ HICP
Apr-01 09:11
Eurozone March flash HICP Y/Y inflation came in at 2.18%, 0.02 hundredths below the rounded consensus of 2.2% (vs 2.32% February). On a monthly basis, Eurozone inflation came in at 0.61% (0.6% cons, 0.43% prior). The data on services in the release should be seen as a good sign regarding tapering stickiness in the category.
- Core HICP printed below consensus, at 2.41% Y/Y and 0.95% M/M (2.5% cons; Feb 2.57% Y/Y, 0.55% M/M).
- Looking at the individual categories:
- Services inflation notably decelerated to 3.42% Y/Y; rounded to 1dp, there has not been a print lower than 3.4% since April 2022. The median sellside analyst estimate ahead of the national data stood at 3.5% - so that looks like a bit of a downside surprise.
- Energy came in at -0.74% Y/Y, with the deceleration vs February's 0.19% underpinned by a sequential fall (M/M at -1.17%) - this looks broadly in line with expectations.
- Non-energy industrial goods printed 0.63% Y/Y, the category has remained between 0.44% and 0.70% since last May and this broadly in line with analyst consensus.
- Food, alcohol and tobacco inflation, as expected, accelerated in March, at 2.90% Y/Y, above February's 2.66% but also broadly line w/ expectations.
- Looking at the national-level prints, headline HICP inflation accelerated in 7 countries in March vs Feb (Netherlands, Austria, Estonia, Latvia, Malta) despite the overall decrease in headline.
EQUITIES: EU Bank put spread
Apr-01 09:11
SX7E (17th Apr) 180/165ps 1x1.5, bought for 0.90 in 7.2k.
