EGBS: Bund Futures Off Session Lows But Bearish Theme Still Dominant
Jul-16 09:26
Bund futures are off session lows following a downtick in Brent crude futures, but remain -6 ticks at 129.40. A bearish technical theme remains intact, with initial support the July 14 low at 129.08, clearance of which would expose the key support at 128.97 (May 14 low).
- German yields are off earlier highs, now up to 0.5bps lower across the curve. Germany will sell E1.0bln of the 1.25% Aug-48 Bund alongside E1.5bln of the 2.90% Aug-56 Bund at 1030BST.
- In France, opposition politicians have been lining up to criticise the budget proposals announced by PM Francois Bayrou on 15 July. There is a strong likelihood that, given the gov'ts minority status, Bayrou will have to push the budget through using Article 49.3 of the French constitution in order to avoid a vote.
- The 10-year OAT/Bund spread remains fairly insulated though, currently 0.5bps tighter at 69bps.
- Broader EGB spreads to Bunds are also little changed, with European equity futures off earlier lows.
- The Eurozone May trade surplus was larger than expected at E16.2bln (vs E14.0bln prior).
- Broader global focus will be on the US PPI report at 1330BST following yesterday’s CPI reading, which started to show some tariff impact in core goods categories.
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SLOVAKIA AUCTION RESULTS: 6/8/10/26-Year SlovGBs
Jun-16 09:25
| Coupon | 3.00% | 3.625% | 3.75% | 1.00% |
| Maturity | Nov-31 | Jun-33 | Feb-35 | Oct-51 |
| Instrument | SlovGB | SlovGB | SlovGB | SlovGB |
| ISIN | SK4000026241 | SK4000023230 | SK4000022539 | SK4000019857 |
| Amount | E61mln | E163mln | E190mln | E112mln |
| Previous | E146mln | E204mln | E121mln | E103mln |
| Avg yield | 2.9429% | 3.2675% | 3.4310% | 4.1232% |
| Previous | 2.9902% | 3.3218% | 3.4744% | 4.1748% |
| Bid-to-cover | 3.92x | 1.80x | 4.90x | 1.88x |
| Previous | 2.67x | 2.44x | 3.64x | 2.75x |
| Avg Price | 100.3177 | 102.4725 | 102.5777 | 50.4004 |
| Low Price | 100.2600 | 102.4100 | 102.5777 | 50.1500 |
| Pre-auction mid | 100.164 | 102.510 | 102.051 | 51.200 |
| Prev avg price | 100.0456 | 102.1082 | 102.2371 | 49.6005 |
| Prev low price | 99.9770 | 102.0130 | 102.2200 | 49.5010 |
| Prev mid-price | 99.928 | 102.063 | 101.953 | 49.331 |
| Previous date | 19-May-25 | 19-May-25 | 19-May-25 | 17-Mar-25 |
EGBS: Bunds Off Session Lows With Oil Down 1%; Key Support Untested
Jun-16 09:24
Bund futures have recovered from earlier session lows of 130.17, now -29 ticks at 130.49. Brent crude futures are down ~1% today, easing near-term concerns around the inflationary impact of an extended conflict between Israel and Iran. The pullback in Bunds from Thursday’s high is considered corrective for now, with key support at 130.12 (June 5 low).
- The German curve has steepened, with 30-year yields up 3bps and Schatz yields up 1bp.
- The 10-year OLO/Bund spread has seen a fairly contained impact from Fitch's rating downgrade on Friday, currently 0.5bps wider at 57bps. While still slightly underperforming EGB peers on the session, a downgrade did not come as a large surprise given Fitch had held Belgium on a negative outlook since March 2023.
- The 10-year BTP/Bund spread has unwound 1.5bps of Friday's 2bp widening, now back to 93.5bps with equity sentiment supported this morning despite continued Middle East tensions.
- Comments from ECB’s de Guindos and Nagel had limited impact on front-end EUR rates.
- Italian May headline HICP saw a downward revision to 1.7% (vs 1.9% flash) due to the food component, while Eurozone Q1 labour costs were revised up to 3.4% Y/Y (vs 3.2% flash).
- The remainder of today’s calendar is light, leaving focus on geopolitical headline flow.
EQUITIES: Equity Roll View
Jun-16 09:18
JPM on US:
- They see the Rolls mostly trading rich vs Fair value, as such they are more tilted to the bearish side in the SPX, NDX, and RTY.
- But they add that the US CPI this Week, the FOMC on the 18th June, as well spot moves, could dampen some of that View.
JPM on EU:
- While they don't see Positioning as long as it was during Q1, they anticipated some early Long Positions to be rolled early in the main European Indices.
