EUROZONE ISSUANCE: EGB Supply: W/C 28 July
Jul-25 18:49
Belgium, Germany and Italy look to hold auctions in the upcoming week. We pencil in issuance of E17.0bln in the week, up from this week’s E10.8bln.
- Belgium will kick off issuance for the week on Monday with a conventional auction of a combined E2.5-3.0bln (in line with our size estimate following the BDA’s increase of its OLO issuance target for 2025). The bonds on offer will be the 2.60% Oct-30 OLO (ISIN: BE0000365743), the 3.10% Jun-35 OLO (ISIN: BE0000363722) and the 3.50% Jun-55 OLO (ISIN: BE0000361700). We had expected the 10-year on-the-run line to be on offer.
- Germany will come to the market on Tuesday to look to sell E4.5bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059).
- Italy on Wednesday will hold a 5/10-year BTP /CCTeu auction, selling E1.5-2.0bln of the 1.35% Apr-30 BTP (ISIN: IT0005383309), E3.0-3.5bln of the 2.70% Oct-30 BTP (ISIN: IT0005654642, as expected in particular), E1.0-1.5bln of the 3.60% Oct-35 BTP (ISIN: IT0005648149, as expected in particular), alongside E1.5-2.0bln of the 1.05% Apr-34 CCTeu (ISIN: IT0005652828).
- Belgium will come to the market on Friday with ORI Facility with details to be confirmed the preceding day.
NOMINAL FLOWS: The upcoming week sees E26.2bln of redemptions: E24.2bln from a formerly 5-year Spanish Bono and E1.9bln from a formerly 10-year SLOREP. Coupon payments for the week total E17.2bln of which E11.2bln are Spanish, E5.8bln are Italian and E0.2bln are from the EFSF. This leaves estimated net flows for the week at negative E26.4bln, down from this week’s positive E2.8bln.
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COMMODITIES: Crude Stabilises, Gold Steady, Bullish Outlook For Copper
Jun-25 18:41
- Oil markets have stabilised on Wednesday after falling sharply over the previous two days following the de-escalation of the Iran-Israel conflict, with the ceasefire holding so far. This has allowed the geopolitical risk premium to decline.
- WTI Aug 25 is up by 0.9% at $64.9/bbl.
- OPEC meets virtually on July 6 to decide August’s production target. Another increase is likely as the group normalises output, targeting market share and punishing overproducing members.
- For WTI futures, support to watch is at the 50-day EMA, at $64.53, which has been pierced. A clear break of it would signal scope for a deeper retracement, exposing $58.87, the May 30 low.
- On the upside, initial resistance to watch is $71.20, the 50.0% retracement of the Jun 23 - 24 high-low range.
- Meanwhile, spot gold has been rangebound today, with the yellow metal 0.2% higher at $3,330/oz.
- A bullish theme in gold remains intact and the recent pullback is considered corrective - for now. Resistance at $3,435.6, the May 7 high, has recently been pierced. Initial key support to monitor is $3,289.2, the 50-day EMA.
- Elsewhere, copper has risen by 0.7% to $496/lb.
- Yesterday’s gains saw copper pierce $502.70, the Apr 23 high, undermining the recent bearish theme and signalling scope for an extension higher near-term. This has opened $514.43, a Fibonacci retracement.
BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening After Early Rally Fades
Jun-25 18:40
European curves lightly twist steepened Wednesday.
- Yields looked headed lower in early trade, with no clear headline driver though seemingly continuing the bullish global bond move from Tuesday's close.
- The rally lost steam however, and yields steadily edged higher throughout the session from around 9am London time.
- Various factors contributing to the reversal included a soft 15Y Gilt auction as well as some fiscal headlines surrounding European countries increasing defence spending amid the NATO summit, and related US threats to increase tariffs on Spain.
- Gilts outperformed Bunds, with twist steepening in both the UK and German curves.
- Periphery/semi-core EGB performance was mixed, with OATs leading gains.
- Thursday's schedule includes appearances by BOE's Bailey and Breeden and ECB's Schnabel, Guidos and Lagarde, along with German GfK consumer confidence and UK CPI data.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.8bps at 1.843%, 5-Yr is up 1.1bps at 2.142%, 10-Yr is up 2.2bps at 2.565%, and 30-Yr is up 2.6bps at 3.052%.
- UK: The 2-Yr yield is down 1.6bps at 3.856%, 5-Yr is down 1.2bps at 3.979%, 10-Yr is up 0.8bps at 4.481%, and 30-Yr is up 2.3bps at 5.231%.
- Italian BTP spread down 0.6bps at 91.3bps / French OAT down 1.6bps at 69.6bps
PIPELINE: Corporate Bond Update: $3B Peru, $3B Honda Launched
Jun-25 18:35
Waiting for Czechoslovak Grp to launch:
- Date $MM Issuer (Priced *, Launch #)
- 06/25 $3B #Republic of Peru $1.6B +10Y +125, $1.4B 30Y +140
- 06/25 $3B #Honda $700M 3Y +70, $1.3B 5Y +85, $1B 10Y +105
- 06/25 $3B #CaixaBank $1B each: 4NC3 +90, 6NC5 +105, 11NC10 +130
06/25 $1.25B #Welltower $600M 5Y +67, $650M 10Y +87 - 06/25 $1.25B *Swedish Export Cr 2Y SOFR+35
- 06/25 $1B #Cheniere Energy +10Y +128
- 06/25 $750M *Resolution Life 10Y 6.75%
- 06/25 $1B Czechoslovak Grp 5.5NC2 6.5%a (dual currency w/ E1B)
