EUROZONE ISSUANCE: EGB Supply - W/C 24 Feb (1/2)
The EU, Belgium, Italy and Germany are all due to hold auctions in the upcoming week. We also pencil in a syndication from Spain. We look for estimated gross issuance for the week of E31.9bln, down from E37.7bln this week.
- On Monday, the EU will hold an EU-bond auction selling up to E2.5bln of the short 3-year 2.875% Dec-27 EU-bond (ISIN: EU000A3K4EW6) and up to E2.5bln of the 15-year 3.375% Oct-39 EU-bond (ISIN: EU000A3LZ0X9).
- Also on Monday, Belgium will hold a conventional auction to sell a combined E2.6-3.0bln of the 2.70% Oct-29 OLO (ISIN: BE0000362716), the 3.00% Jun-34 OLO (ISIN: BE0000333428) and the 1.90% Jun-38 OLO (ISIN: BE0000336454).
- The fact that the longest maturity OLO on offer at the auction has 13-years to maturity increases our conviction that the second Belgian syndication of the year will be a 30-year issue – but we think the timing of that has likely shifted to March instead of February now.
- On Tuesday, Italy will hold a BTP Short Term and BTPei auction. On offer will be E2.5-2.75bln of the 2.55% Feb-27 BTP Short Term (ISIN: IT0005633794) - in line with our expectations - and E1.25-1.5bln of the 1.80% May-36 BTPei (ISIN: IT0005588881).
- Also on Tuesday, Germany will hold a Green auction selling E1.5bln of the 1.80% Aug-53 Green Bund (ISIN: DE0001030757).
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GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP3bln of the 0.875% Jul-33 Green Gilt (ISIN: GB00BM8Z2S21) at its auction next Wednesday, January 29.
EURIBOR OPTIONS: Latest Option flows
- ERM5 97.87/97.75/97.62p fly bought for 2.5 in 14.8k, done straight and vs futures.
- ERM5 98.00/98.50/99.00c fly, bought for 3 in 10k total.
- ERM5 97.75/97.87/98.00c fly, bought for 1.25 in 4k, total 17k total.
NOK: O/N NOKSEK Vols Relatively Subdued Ahead Of Norges Bank Decision
Norges Bank is unanimously expected to remain on hold at tomorrow’s meeting, while continuing to guide for a rate cut in March. As such, markets are well priced for an uneventful outcome, with overnight ATM NOKSEK vols of 7.5 below prevailing levels ahead of the September, November and December 2024 decisions. An overnight NOKSEK straddle would thus require just a 30 pip (~0.3%) swing to breakeven.
- On the downside, key support remains at 0.9717 (Jan 2 low). Clearance of this level would undermine the corrective rally which began at the start of this year and expose trendline support drawn from the August 2024 low at 0.9667.
- The Jan 15 high at 0.9859 represents initial resistance, coinciding with the 61.8% retracement of the Nov 22nd – Dec 20th bear leg.
- We view the risks to tomorrow’s decision as slightly tilted in a hawkish direction, with the weak exchange rate, higher commodity prices and increases in global implied policy rates all hawkish inputs into Norges Bank’s framework.
- One area of interest amongst analysts ahead of the decision is whether the weak exchange rate will return to having a prominent role in the policy statement’s risk assessment.
- MNI’s preview of the decision is here.
