EU FINANCIALS: BPCE Agrees to Buy Novo Banco

BoE Deputy Governor Breeden’s address seems geared towards counterparty and regulatory matters, as opposed to monetary policy.

• We noted that the setting for the address (keynote speech at the ISDA AGM) could limit the scope for meaningful monetary policy comments.
• Full text here.

• EUR Benchmark 5Y Fixed (Oct. 22, 2030) MS+30 Area (MNI expects E7bln size, with downside risks).
• Coupon: Annual, act/act, short first
• Settlement: May 21, 2025
• ISIN: BE0000365743
• Bookrunners: BNPP, Barclays (B&D), Citi, Natixis, SocGen
• Timing: May price today

Details as per Bloomberg

Although a 25bp June cut remains essentially fully priced in ECB-dated OIS, markets are unwilling to fully price another 25bp move given the recent moderation in US/China trade tensions. Obvious catalysts for additional repricing at the front-end are meaningful EU-US trade deal developments and hard data that captures the Liberation Day announcement, rollback, and associated policy uncertainty.

• Euribor futures are flat to -2.5 ticks through the blues. ERZ5 is -2.0 ticks at 98.145, with pivot support seen around the 98.1000 level.
• After reaching a multi-month low of -39.0 ticks on April 22, the ERM5/M6 spread has steepened up to -16.5 ticks, having now fully unwound the April Liberation Day-induced fall.
• German and Spanish Y/Y April HICP confirmed flash estimates this morning, leaving focus on any commentary from ECB's Escriva, Nagel, Villeroy and Holzmann.