GERMAN AUCTION PREVIEW: 2.50% Nov-32 Bund
Oct-22 08:35
This morning, Germany will reopen its on-the-run 7-year 2.50% Nov-32 Bund (ISIN: DE000BU27014) for the second and final time this year.
- The launch auction of the line on August 27 was very soft with only E3.170bln of bids received for the intended E4.0bln transaction. However, ahead of the first reopening came the release of the Q4 issuance plan in which it was announced today's auction would be the sole auction of the quarter for the 7-year Bund with a smaller E3bln size. That probably helped the first re-open of the line fare a little better, with a 1.48x bid-to-cover / 1.13x bid-to-offer combination and the lowest accepted price at the auction coming in above the secondary market mid-prices.
- Domestically in Germany, Finance Minister Klingbeil is scheduled to update the government's tax projections tomorrow, with current revenues likely running a little ahead of the previous plan. For detailed considerations see our post at 08:19 BST.
- The next German auction will be E4bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059) on October 28.
- Timing: Results will be available shortly after the bidding window closes at 10:30BST / 11:30CEST.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EGBS: Sovereign Rating Divergence Between Italy & France Underscored On Friday
Sep-22 08:27
Modest EGB/Bund spread widening seen alongside a downtick in European equity index futures, although both moves are fairly contained, with Stoxx 50 futures already recovering from session lows.
- EGB/Bund spreads little changed to ~1bp wider, OATs the marginal underperformer after the once-notch sovereign rating downgrade of France from Morningstar DBRS underscored the fiscal & ratings headwinds for OATs. OAT/Bund spread consolidates above 80bp.
- BTPs don’t see much of a lasting tailwind after Italy received the (at least partially expected) one-notch rating upgrade from Fitch, with the rating agency noting “increased confidence in Italy's fiscal trajectory, underpinned by a growing record of fiscal prudence and strong commitment to meeting short- and medium-term fiscal targets under the new EU fiscal framework”. BTP/Bunds trades ~0.5bp wider on the day.
- Weekend comments from Italian Economy Minister Giorgetti were relatively upbeat, as he outlined the potential for the deficit/GDP ratio to print below 3% come the end of the current fiscal year.
- Commerzbank suggest that “the pressure on OATs and simultaneous support for BTPs looks set to continue with the rating changes. While the budget consolidation process in France looks set to become particularly difficult after latest remarks from Bardella ("If Lecornu continues Macron policies, he'll fail"), Budget/supply headwinds thus look set to continue to take their toll on OATs, while it is noteworthy that the 10-Year z-spreads have not yet fully converged. We stick with our view of full BTP/OAT convergence, also in tenors beyond 10-Year”.
MONTH-END EXTENSIONS: Early Projections
Sep-22 08:24
Bloomberg Bonds projection:
- US Tsys: +0.06yr (small).
- EU Govies: +0.08yr (average).
- UK Govies: 0.00yr (non event).
FOREX: FX OPTION EXPIRY
Sep-22 08:16
Of note:
EURUSD 4.97bn between 1.1700/1.1800.
EURUSD 1.66bn at 1.1750 (tue).
EURUSD ~1bn at 1.1750 (wed).
GBPUSD 1.28bn at 1.3500 (wed).
EURUSD 1.3bn at 1.1740/1.1750 (thu).
USDCAD 1.3bn at 1.3795/1.3800 (thu).
EURUSD 1.7bn at 1.1750 (fri).
- EURUSD; 1.1700 (583mln), 1.1720 (626mln), 1.1730 (630mln), 1.1745 (559mln), 1.1770 (461mln), 1.1775 (260mln), 1.1780 (245mln), 1.1790 (465mln), 1.1800 (1.14bn).
- GBPUSD: 1.3500 (393mln).
- USDJPY; 148.35 (350mln).
- USDCAD: 1.3800 (519mln).
- AUDUSD: 0.6600 (547mln).
