EUROZONE ISSUANCE: EGB Supply - W/C 2 May, 2025
Austria, Germany, France, Spain and Ireland all look to hold auctions in the upcoming week. There is also a possible Belgian syndication in upcoming weeks. We pencil in estimated gross issuance for the week of E26.1bln, down from E35.0bln this week.
For the full MNI Issuance, Redemption and Cash Flow Matrix click here.
- On Tuesday, Austria will look to hold an RAGB auction. On offer will be a combined E1.725bln of the on-the-run 10-year 2.95% Feb-35 RAGB (ISIN: AT0000A3HU25) alongside the 20-year 3.15% Jun-44 RAGB (ISIN: AT0000A0VRQ6)
- Also Tuesday, Germany will come to the market with E4.5bln of the 2.40% Apr-30 Bobl (ISIN: DE000BU25042) on offer.
- On Wednesday, France will look to hold a LT OAT auction (rather than on the usual Thursday due to the VE day public holiday). On offer will be a combined E10-12bln of the on-the-run 10-year .20% May-35 OAT (ISIN: FR001400X8V5), the 1.25% May-38 OAT (ISIN: FR0014009O62) and the 4.50% Apr-41 OAT (ISIN: FR0010773192).
- On Thursday, Spain will hold a Bono/Obli/ObliEi auction. On offer will be the 3-year on-the-run 2.40% May-28 Bono (ISIN: ES0000012O59), the on-the-run 5-year 2.70% Jan-30 Bono (ISIN: ES0000012O00) and the on-the-run 30-year 4.00% Oct-54 Obli (ISIN: ES0000012M93) alongside the 1.00% Nov-30 Obli-Ei (ISIN: ES00000127C8). The auction size will be confirmed on Monday.
- To conclude the week, also on Thursday, Ireland will look to hold an auction. Due to the public holiday on Monday, the details will be announced on Tuesday.
NOMINAL FLOWS: The week ahead sees a single redemption of E1.0bln from a formerly 5-year Lithuanian bond. Coupon payments for the week total E0.4bln. This leaves estimated net flows for the week at positive E24.8bln versus negative E0.9bln this week.
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STIR: ECB & BoE Pricing Off Dovish Session Extremes As Stocks Rally From Lows
EUR & GBP STIRs off dovish session extremes but still a couple of bp more dovish on the day when it comes to end ’25 implied rate pricing.
- ECB-dated OIS shows ~63bp of cuts through year-end, while BoE-dated OIS shows ~53bp of cuts over the same horizon, comfortably within multi-week ranges.
- The recent rally in equities has removed some of the dovish repricing seen through the London morning & early NY trade, but tariff uncertainty still lingers, limiting the scope of the pullback.
UK: Reeves-Won't Need A Repeat Of Tax-Raising Budget 'On Scale Of Oct 2024'
Chancellor of the Exchequer Rachel Reeves speaking in a House of Commons select committee hearing regarding last week's Spring Statement. Livestream here. Asked by opposition Conservative MP John Glen whether she can rule out raising taxes in the October Budget, Reeves says that she will 'not need to repeat' the scale of tax rises that was seen in the 2024 budget.
- Regarding the upcoming imposition of US 'reciprocal tariffs', Reeves says "I do believe in free trade" and claims "the UK does have balanced trade with the US." Says "We do not want to see trade barriers go up but fall...not just with the US...but the EU, India and other countries..."
- Asked whether the UK will impose retaliatory tariffs, says "Let's first see how other countries respond...Big UK exporters don't want gov't to rush into a response." Regarding the UK's stance on US tariffs, which has been seen as less combative than the EU, says "We do not want to do anything that will undermine an economic agreement with the US...We are not going to rush into action to get a quick headline."
- Reeves: "Specific tariffs on the UK are less relevant than the global demand picture...Even if [a deal] with the US is possible, it does not mean we are out of the woods."
- Says she understands the US' position with regard to its trade balance, but that the UK is not the root cause of this.
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP4.5bln of the 4.375% Mar-30 Gilt (ISIN: GB00BSQNRD01) at its auction next Wednesday, April 9.
