EGBS: Bund Futures Down 15 ticks On Light Volumes, No Data
Bund futures have weakened 15 ticks today on below average volumes, currently at 130.08. Downside pressure has been fairly steady since the European open, with desks potentially reacting to yesterday evening’s weak US 30-year auction. Headline flow has been light, with no major regional data released either.
- This week’s light weakness in Bunds is considered corrective from a technical perspective. Initial support is around the 129.80 level, with key support and the bear trigger not seen till 128.84 (Jul 25 low).
- German yields are 2-3bps higher, while 10-year EGB spreads to Bunds are up to 0.5bps tighter. The BTP/Bund spread is gradually narrowing the gap to support around 75bps, the 2010 low.
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MNI: mni: boe says financial stability risks remain elevated
- MNI: BOE SAYS FINANCIAL STABILITY RISKS REMAIN ELEVATED
- BOE: UK BANK SYSTEM REMAINS IN STRONG POSITION
UK: BOE: Financial Stability risks still elevated - FPC
Risks and uncertainty from geopolitical tensions and global fragmentation of trade remain elevated, the Bank of England's latest Financial Stability Report notes, with pressures on sovereign debt markets also still high.
Although some risks have crystalised, material uncertainty remains for the global macroeconomic outlook. With its large open financial sector, these risks are "particularly relevant to the UK," the FSR notes.
- However, UK consumer and corporate borrowers remain resilient and the banking system remains in a strong position to support households and businesses if we see a downturn worse than expected.
- Risks remain from continued high valuation of global asset prices
- Banks' CET 1 ratio was 14.4% in Q1, with liquidity cover at 153%
- The Financial Policy Committee maintained the countercyclical capital buffer (CCyB) rate at 2%, with relevant risk indicators not materially above long-term averages, with the FPC adding it stood ready to raise the CCyB if necessary.
- Despite a period of high volatility and transactional volumes, operational resilience in core government bond and repo markets was sustained through Q2.
- Gilt repo discussion paper to be published by BOE 'soon'
EQUITIES: Some notable upside momentum in Equities
- Some decent upside momentum in European Equities, no new headlines, and although we can't confirm stops, the price action would suggest so, some short are likely closing.
- Next resistance in VGU5 is at 5456.00, the June high.
- This latest leg is not Banking led, although SX7E is also at a new multi Year high.
- US Equities are now getting dragged higher.
