BOND SUMMARY: EGB/Gilt: Broad Gains
May-27 10:43
European government bonds have broadly rallied this morning alongside gains for equities.
- Gilts have firmed through the morning with the curve bull flattening. Cash yields are 3-5bp lower on the day.
- The long end of the bund curve has similarly outperformed with the 2s30s spread narrowing 4bp.
- OATs trade in line with bunds. Yields are now 1-5bp lower.
- The BTP curve has twist flattened with the 2s30s spread trading down 4bp.
- The ECBs Pablo Hernandez de Cos earlier stated that increase rate hikes should be gradual and that inflation will gradually slow towards the 2% target.
- Supply this morning came from the UK (UKTBs, GBP2bn) and Italy (BOTs, EUR5bn)
- The data focus shifts to US PCE and the University of Michigan consumer confidence update for May.
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BOND SUMMARY: EGB/Gilt: Gazprom Supply Cut Further Fuels Inflation Concerns
Apr-27 10:41
European government bonds have lacked strong direction this morning while equities have broadly pushed higher.
- Gazprom's decision to cut gas supplies to Poland and Bulgaria has provided a further jolt for energy prices.
- German and French consumer confidence data for May and April, respectively, came in lower than expected as price pressures continue to intensify.
- Gilts have traded lower with yields up 2-4bp and the curve slightly bear flattening.
- The bund curve has twist flattened with the 2s30s spread narrowing 3bp.
- OATs have traced out a similar path with the curve flattening 3bp.
- BTPs have traded weaker across the curve with cash yields up 2-3bp.
- Supply this morning came from Germany (Bund, EUR1.704bn allotted), Italy (BOTs, EUR5bn) and Greece (GTBs, EUR625mn). In addition, the UK sold GBP1.8bn of the 0.125% Mar-73 via syndication with an order book in excess of GBP20.5bn.
STIR FUTURES: Fed Pricing Back Up Near Yesterday AM Levels
Apr-27 10:22
- Pricing a 51bp hike for the May meeting, 106bp for June, 192bp for Sep and 238bp to year-end.
- Light data docket but the MBA mortgage data could be of note after the 30Y contract rate last week touched the highest since Apr-2010 at 5.20%.
- The Senate confirmed Brainard as Vice Chair yesterday (52-43) as expected but the vote for the three other nominees could be delayed with Covid absences preventing Democrats from proceeding with Cook’s vote.
Source: Bloomberg
BUNDS: Greek/Bund spread test resistance
Apr-27 10:16
- With the Greek 10yr Yield back above 3.00%, did print a 3.134% high yesterday, now at 3.092%.
- The Greek/Bund spread is wider by another 9bps, and testing through initial resistance at 223.69, now at 224bps.
- Above the latter, opens to 229.72bps, the 11th March high (widest)
