EGBS: Early Rally In Bunds Fades; Focus On Fresh Middle East Catalysts
The early rally in Bund futures has faded, now +6 ticks at 131.02. Bunds are in consolidation mode and continue to trade below the Jun 13 high. For now, the latest move down appears to be a correction. Key short-term support to watch remains at 130.12, the Jun 5 low.
- Broader focus remains on the Israeli-Iran conflict, but today’s headline flow has done little to meaningfully move FI markets. Overnight US President Trump said he would decide within two weeks whether to strike Iran.
- German yields are up to 1bp lower.
- 10-year EGB spreads to Bunds are biased tighter, with European equity futures up 0.8%. After widening 3.5bps yesterday, the OAT/Bund spread has narrowed 1.5bps to 73bps.
- Flash Eurozone consumer confidence is due at 1500BST, with consensus looking for a slight improvement to -14.9 (vs -15.2 prior). More focus is on Monday’s June flash PMIs.
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GERMAN AUCTION RESULTS: 2.50% Feb-35 Bund
| 2.50% Feb-35 Bund | Previous | |
| ISIN | DE000BU2Z049 | |
| Total sold | E4bln | E4bln |
| Allotted | E3.052bln | E3.049bln |
| Avg yield | 2.66% | 2.47% |
| Bid-to-offer | 1.85x | 1.06x |
| Bid-to-cover | 2.42x | 1.38x |
| Avg Price | 98.61 | 100.25 |
| Low Price | 98.60 | 100.23 |
| Previous date | 23-Apr-25 |
No pre-auction midprice available.
GERMANY: IFO Sees Order Shortage Easing But Remaining High
"In April, 37.3 percent of companies [in Germany] reported a lack of orders, down from 40.2 percent in January", IFO reports.
- "The signs of easing that were seen at the start of the year thus persist. Nevertheless, the share of affected companies remains high in a long-term comparison. [...] Demand remains subdued in many places, and the current high level of uncertainty could quickly reverse the trend."
- Note that German exports rose 2.7% Q/Q in Q1, underpinned by strong demand from the US likely driven by tariff front-running in the country - that might have had an downward impact on any recent orders shortage perception in Germany.
- From a broader perspective, sentiment in Germany has moved off lows over the course of 2025, driven by the manufacturing sector (but remains subdued overall). Tomorrow will see both the flash PMI and IFO releases for May within 30 minutes - consensus is for modest improvements across indicators (Manufacturing PMI 48.8 vs 48.4 March, Services PMI 49.5 vs 49.0 March, IFO Business Climate 87.3 vs 86.9 March).
GLOBAL: Bloomberg Pricing Still Slow, Connectivity Issues Hinder Volumes
Still monitoring issues with the Bloomberg terminal globally - it's now become front page news on the FT, who cite Bloomberg as saying
- “We’re currently experiencing a global terminal issue, and our engineering team is actively working to identify and resolve the problem. I sincerely apologize for the inconvenience, and we truly appreciate your patience and understanding in the meantime.”
The FT piece cites a trader as seeing much lower volumes as a result of the outage: “Would you bet on a match that you can’t see or know the score,”, adding that trading volumes were lower as a result.
- We see the BBG IB service as still functioning well, but particular issues remain when calling up prices and calendars. We also note the UK DMO have extended the bidding deadline for the Gilt auction to 1130BST when (presumably) the BBG terminal issues will be fixed - but there's no confirmation the issues will be sorted by then.
