EGBS: Bunds See Light Support On Latest Iran Headline; Ranges Still Tight
Headlines noting that a televised message from the Iranian Supreme Leader will be aired “shortly” has provided light support to Bund futures, which are now +11 at 130.87. That brings Bunds to the top of today’s tight 34 tick intraday range. The move lower in Bunds from the June 13 high is still considered corrective for now, with key short-term support at 130.12 (June 5 low).
- German yields are up to 1bp lower, with the belly lightly outperforming. 20/30-year Bund supply was digested smoothly.
- 10-year EGB spreads to Bunds are biased wider, with Middle East tensions capping risk sentiment. The BTP/Bund spread is back to 96.5bps, from a multi-year low of 90bps last week.
- Eurozone final May HICP confirmed flash estimates at a rounded 1.9% Y/Y (vs 2.2% prior), with core also unrevised at 2.3% Y/Y (vs 2.7% prior).
- ECB’s Panetta unsurprisingly noted that the Israel-Iran conflict presents a risk to the outlook alongside US tariffs. His remarks were not market moving.
- Several ECB speakers are still scheduled today, but more focus will be on this afternoon’s US jobless claims data and the FOMC decision this evening.
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DUTCH T-BILL AUCTION RESULTS: 2.5 / 5.5-Month DTCs
| Type | 2.5-month DTC | 5.5-month DTC |
| Maturity | Jul 30, 2025 | Oct 30, 2025 |
| Amount | E1.15bln | E1.25bln |
| Target | E1.0-2.0bln | E1.0-1.5bln |
| Previous | E1bln | E1.01bln |
| Avg yield | 2.025% | 1.978% |
| Previous | 2.105% | 2.002% |
| Bid-to-cover | 2.56x | 2.3x |
| Previous | 2.71x | 2.24x |
| Previous date | Apr 22, 2025 | Apr 22, 2025 |
GILTS: Sell Off & Steepening Extends
Gilts remain under pressure as Tsys soften in the wake of the U.S. sovereign rating downgrade from Moody’s late on Friday.
- Futures are through next support and the bear trigger (90.96) and have pierced Fibonacci support (90.92), with bears now eying the April 11 low (90.47). lows of 90.86 so far.
- Yields are 3-9bp higher, curve steeper.
- 10-Year yields register the highest level of the month 4.726%, with the next upside level of note at the April high (4.800%).
- 30-Year yields also hit the highest level of the month (5.492%), with the April 11 high (5.546%) presenting the next area of upside interest.
- 10s spread vs. Bunds 1bp wider at 206.5bp, set for the highest close since April 22.
- GBP STIRs move in a hawkish direction given the sell off further out the curve.
- SONIA futures little changed to -7.5.
- BoE-dated OIS little changed to 1.5bp more hawkish across ’25 meetings showing ~41bp of cuts through year-end.
- Wednesday’s CPI data headlines the UK calendar this week. We have written a little on that in our global week ahead/late Friday bullets, expect more in our full preview.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.200 | -1.0 |
Aug-25 | 4.055 | -15.5 |
Sep-25 | 3.994 | -21.6 |
Nov-25 | 3.867 | -34.3 |
Dec-25 | 3.803 | -40.7 |
Feb-26 | 3.718 | -49.2 |
Mar-26 | 3.703 | -50.7 |
EFSF ISSUANCE: New E3bln WNG 7-year syndication: Final terms
- Spread set earlier at MS+34bps (guidance was MS+36bps area)
- Size: E3bln WNG
- Books closed in excess of E9.5bln (inc E700mln JLM interest)
- Maturity: 27-Sep-2032
- Settlement: 26-May-2025 (T+5)
- Coupon: Short first to 27-Sep-2025
- Bookrunners: DB(B&D/DM)/DZ/GSBE SE
- ISIN: EU000A2SCAU4
- Timing: Allocations and pricing to follow
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