HYBRIDS: Abertis (ABESM BB/ /BB+) Perp Yield Set
May-14 11:17
Yield: 4.75% set
• Books >2.0bn; Size 500m
• IPT: PerpNC5.75 5.125-5.25%
• Sub_sen I will take +125bps. ABESM 4.87% Sub_Sen +115.
• FV: 4.625% with Sub_Sen +125; Senior +98; Swap 2.38%
• UOP: Tender of the Call25
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US TSYS: Gains Led By The Belly, Waller Headlines Today’s Docket
Apr-14 11:14
- Treasuries are firmer across the board, led by the belly, with prospects that recent reciprocal tariff exemptions for electronic items could be short-lived and with Trump still considering semi-conductor tariffs.
- Treasuries underperform most EGBs and Gilts.
- Cash yields are 1.5-7bp lower from Friday’s close, with 5s leading declines and 30s lagging.
- It sees some renewed steepening for 5s30s (currently 76.7bps, +5.0bp) after last week’s wide ranges of 65-95bps with the 65bp seen after tariff pause announcements.
- TYM5 at 110-07 (+ 15+) is within a few ticks of session highs, on more typical overnight volumes of 340k after the huge sessions in recent weeks.
- It has remained within Friday’s range throughout. It maintains a bearish tone, with support at 109-08 (Apr 11 low) after which lies 108-26+ (Fibo retracement of Jan 13- Apr 7 bull cycle), whilst resistance is seen at 111-01+ (20-day EMA).
- Another inflation expectations survey is the sole pick of today’s data before Fed Governor Waller speaks at 1300ET. The latter would likely be more of note after a raft of patient Fedspeak.
- Earnings also increasingly come into focus this week (starting with Goldman Sachs today but picking up from Tuesday).
- Data: NY Fed consumer inflation expectations Mar (1100ET)
- Fedspeak: Waller (1300ET, text + Q&A), Harker (1800ET, text + Q&A), Bostic fireside chat on policy (1940ET) – see STIR bullet for Waller. Harker (retiring in June) and Bostic (non-voter) speaking far after the close.
- Bill issuance: US Tsy $76B 13W, $68B 26W bill auctions (1130ET)
FOREX: USDJPY Trend Condition Remains Bearish
Apr-14 11:13
- Despite the carryover from the tariff reprieves for key tech products boosting sentiment to start the week, USDJPY has traded lower in sympathy with broad dollar indices. 5-year treasury yields dropping 7bps on the session appears to be providing an additional yen tailwind.
- After gapping higher at the open to levels around 144.30, USDJPY has steadily sold off, seeing the pair reach as low as 142.24 before stabilising back around 143.00 into the NY crossover. The trend condition remains bearish, and below the 144.02 cycle lows sights are on 141.65 next, the Sep 30 ‘24 low.
- According to Goldman Sachs, more dovish inflation and rate implications in Japan look unlikely to be a barrier to further Yen strength, just as BoJ hikes were not a headwind to weakness in recent years. Overall, GS state that near-term downside risks to the global economy and markets leave them looking for further tactical JPY outperformance vs more cyclical currencies (like AUD) as well as vs USD.
- GS see a high likelihood that spot reaches their 12m forecast of 135 in very short order if signs of US labour market deterioration begin to emerge or market stress deepens. On the other hand, SocGen point out that if the FX market was still faithfully following rate moves, USD/JPY would be ~155 this morning.
- Despite there being holidays associated with the Easter weekend, Friday will see the release of National CPI data, forecast to come in at 3.7% Y/y.
OUTLOOK: Price Signal Summary - Bear Threat In Gilts Remains Present
Apr-14 11:08
- In the FI space, Bund futures traded in a volatile manner last week and for now, remain below their recent highs. A bull cycle is in play and the latest pullback is considered corrective. A fresh short-term cycle high on Apr 7 reinforces a bullish theme. The contract has recently cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This opens 132.56 next, the Feb 28 high. Initial firm support lies at 128.60, the Apr 9 low.
- A sharp sell-off in Gilt futures last week highlights a strong bearish theme. The contract has breached 90.55, the Mar 27 low. Clearance of this level confirms a full reversal of the Mar 27 - Apr 7 rally. Sights are on the 90.00 handle next, briefly pierced on Apr 9. A clear break of this level would signal scope for an extension towards a key support at 88.96, the Jan 13 low on the continuation chart. Initial resistance is at 91.84, the 20-day EMA.
