EGBS: Bund Yields Hovering Around 2.70%; Global FI and Risk Cues To Set Tone
Nov-17 10:22
10-year Bund yields are down ~1.5bps today but remain just above the 2.70% figure for now. With this week’s Eurozone data calendar backloaded (flash PMIs and Q3 negotiated wages are due Friday), Bund yields will likely take cues from global FI peers and broader risk sentiment in the coming sessions. Nvidia’s earnings on Wednesday will be watched across global markets.
- Bund futures are +7 ticks at 128.73. A bear cycle remains in play, with RXZ5 having pierced support at 128.52 (76.4% retracement of the Sep 25 - Oct 17 bull leg) this morning. A clear break of this handle would signal scope for an extension towards 128.25, the Oct 7 low.
- BTPs outperform in the EGB space, with the 10-year spread to Bunds down 1.5bps to ~73.5bps. The OAT/Bund spread is marginally wider, with lingering political/fiscal risks holding French paper back versus peers.
- No material outperformance for GGBs on the back on Fitch's expected ratings upgrade on Friday (10-year GGB/Bund spread -1bps at ~61.5bps at typing).
- Italian final October HICP inflation confirmed flash estimates at 1.3% Y/Y.
- The European Commission’s Autumn forecasts saw 2026 inflation revised up to 1.9% (vs 1.7% prior), and GDP revised down to 1.2% (vs 1.4% prior).
- Canadian inflation headlines today’s North American data calendar, with any more details on US data releases following the Government reopening also in focus.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
