EGBS: Bund Futures In Bear-Mode Cycle, Important Bundestag Vote Due Soon
Dec-05 10:39
- Bund futures remain in a bear-mode cycle. Futures are -7 ticks today at 128.33, off lows of 128.29. Initial support is 128.18, a Fibonacci projection level.
- There will be interest in the outcome today’s German pension system vote, expected in the next hour. Chancellor Merz's coalition holds a very narrow majority, and 18 younger CDU lawmakers have voiced opposition to the reforms. Merz may still be able to get the vote through the Bundestag, but is reliant on an abstention from Die Linke.
- 10-year Bund yields briefly tested 2.78% earlier, clearance of which would expose the 2.80% figure. Bund yields are now in line with our linear fair value model, while analyst views are tilted in favour of further increases through next year. Intraday, the German curve has seen a horizontal 0.5bp shift higher.
- 10-year EGB spreads to Bunds are biased a touch narrower, with BTP/Bund consolidating below the 70bp figure. 10-year OAT/Bund is at 74.5bps, with focus on today’s National Assembly vote on the Revenue section of the 2026 Social Security budget.
- The final read of Eurozone Q3 GDP was revised up a tenth on a rounded basis to 0.3% Q/Q. Underlying domestic demand details look solid, while compensation per employee growth also surprised to the upside. The market impact was limited, but it’s a hawkish set of data for the ECB.
- French/Spanish industrial production and Italian retail sales also surprised to the upside today.
- In North America, US PCE and Canadian labour market data are due this afternoon.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EGBS: Bund Futures Continue To Consolidate Above Key Support Zone
Nov-05 10:39
- The early risk-off inspired bid in Bund futures has faded, but RXZ5 remains above the 129.13 support area (aligning with the 50-day EMA and October 13 low). Futures are currently -2 ticks at 129.27, with solid results at today's 15-year Bund auction helping the contract away from session lows of 129.22.
- German yields are up to 1bp lower across the curve.
- Alongside the German supply, Italy held a E5bln buyback transaction.
- 10-year EGB spreads to Bunds are up to 1bp wider on the session, with global equity sentiment still relatively weak.
- Following upward revisions in France and Germany, and stronger-than-expected readings in Italy and Spain, the Eurozone services PMI was revised up to 53.0 (vs 52.6 flash, 51.3 prior). With the manufacturing PMI confirming flash estimates at 50.0 on Monday, this left the composite reading at a 29-month high of 52.5.
- There were marginal upward revisions to the ECB's latest forward-looking wage tracker relative to the September iteration, but the general conclusion that compensation pressures are expected to ease in the coming year remains intact.
- ECB’s Kocher is scheduled to speak on “Negative Rates and the Effective Lower Bound” later today.
FOREX: USD Remains on Front-Foot, DXY Testing August Highs
Nov-05 10:34
- After some moderate weakness during the APAC session, the US dollar has reversed back to recovery highs, keeping the post-FOMC topside momentum firmly intact. Gains today for the DXY would represent a sixth consecutive winning session, as the index currently flirts with the August highs, a break of which would represent 5-month highs.
- The most notable price action overnight was for USDJPY, which had a sharp selloff to 152.96, as the risk off sentiment across global markets initially extended. Assisting the yen rally was the BOJ minutes, where one board member, apart from the two dissenters, said it was time to consider another hike. Subsequently, risk stabilised and provided a more supportive tone for USDJPY, which has risen to a session high of 153.84 ahead of the NY crossover.
- In line with the broader greenback advance, USDCAD is also on a 5-session winning streak, currently trading at 6-month highs. Canada yesterday budgeted its biggest ever cash deficit this fiscal year, excluding the pandemic, on a fiscal push to revitalize sluggish growth in the country. This week’s extension of USDCAD highlights a clear reversal of the corrective bear leg between Oct 14 - 29. Spot is currently testing 1.4136, the top of a bull channel drawn from the Jul 23 low. Above here, 1.4167 is the next level of note, the 50.0% retracement of the Feb 3 - Jun 16 bear leg.
- GBPUSD remains in focus following its pronounced downtrend since mid-September. The pair remains close to cycle lows today as markets digest Chancellor Reeves’ speech on Tuesday hinting at tax increases, and await tomorrow's BoE MPC decision, set to be a close decision between a hold and a 25bp cut. Following the break of 1.3041, sights are on 1.2971 next, a Fibonacci projection point. Note that the trend is in oversold territory and a recovery would allow this condition to unwind. Initial resistance is at 1.3142, the Aug 1 low.
- ISM services highlights today's data calendar. A set of ECB speakers including Schnabel are scheduled over the next couple of days, while we will also hear from SNB's Tschudin today.
GERMAN AUCTION RESULTS: 15-Year Bunds
Nov-05 10:34
| 2.60% May-41 Bund | 2.50% Jul-44 Bund | |
| ISIN | DE000BU2F009 | DE0001135481 |
| Total sold | E1bln | E1bln |
| Allotted | E846mln | E800mln |
| Previous | E853mln | E794mln |
| Avg yield | 3.02% | 3.09% |
| Previous | 3.06% | 3.04% |
| Bid-to-offer | 2.89x | 1.41x |
| Previous | 2.36x | 3.52x |
| Bid-to-cover | 3.41x | 1.77x |
| Previous | 2.77x | 4.43x |
| Avg Price | 94.90 | 91.70 |
| Low Price | 94.89 | 91.70 |
| Pre-auction mid | 94.823 | 91.623 |
| Prev avg price | 94.38 | 92.36 |
| Prev low price | 94.38 | 92.35 |
| Prev mid-price | 94.327 | 92.266 |
| Previous date | 08-Oct-25 | 09-Jul-25 |
Trending Top
Jan-30 21:43
Jan-30 21:11
