EGB FUNDING UPDATE: DSTA to reduce WAM and new minimum outstanding targets
"Issuance in 2026 will contribute to the DSTA’s goal to slightly shorten the average maturity of the debt, swap and cash portfolio to a minimum of 7.5 years. Additionally, the DSTA has decided to increase the minimum outstanding volume target for new Dutch State Loan (DSL) issuances with a maturity of up to and including 10 years from €12 billion to €15 billion. For maturities shorter than 10 years, this volume must be reached within 12 months of the initial issuance, while for the 10-year benchmark the €15 billion target must be reached within the calendar year. In this way, the DSTA aims to stimulate liquidity in the DSL market."
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Historical bullets
OIL: Fallout From OPEC+ Report Still Driving Crude Weakness
Weakness in crude benchmarks has extended through the afternoon, with Brent futures now down over 2.5% on the session at ~$63.50. As noted in earlier posts, the trigger for the selloff has been the latest Monthly Oil Market report from OPEC+. The report pointed to a market surplus forming in Q3, contrary to prior expectations for a deficit.
- Our commodities team notes that OPEC has typically been the most bullish vis a vis supply-demand fundamentals and the Q3 surplus reinforces concerns for an oversupplied market.
- Initial support in COF6 is the November 6 low at $62.84, which shields the bear trigger at $59.97 (Oct 20 low).
GILTS: Off Pullback Lows, Bulls Remain In Control
Gilts draw support from the bid in EGBs and cross-market inputs (oil lower & equities off highs) detailed in recent bullets.
- Bears failed to close yesterday’s opening gap higher in futures and the technical picture in the contract remains bullish, with key resistance located at 93.98.
SOFR OPTIONS: Midcurve Put strip
2QX5 96.75/96.68p strip, bought for half in 4k.
