BONDS: EGBs-GILTS CASH CLOSE: Curves Twist Steepen Ahead Of Busy Week
Yields picked up Friday, with long-end Gilts underperforming. The German and UK curves both twist steepened on the day.
- Gilts led the way at the short end, following softer-than-expected UK GDP data driving dovish BOE repricing ahead of next week's meeting, with long end yields picking up on concerns that weaker growth could exacerbate fiscal pressures.
- EGBs/Gilts saw some additional modest weakness in the early European afternoon alongside Global FI on a hawkish Bloomberg sources piece on the Bank of Japan.
- Periphery/semi-core EGB spreads widened toward the cash close, mirroring a pullback in equities.
- Otherwise, developments were limited. Final November inflation readings for Germany, France, and Spain brought no significant surprises.
- For the week, the UK curve twist steepened (2Y yield -3.4bp, 10y +4.1bp) with Germany's ending flat (2Y and 10Y both +5.9bp).
- Next week's schedule is packed, with the final BOE and ECB decisions of the year, as well as flash PMIs and UK CPI and labour market reports.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.6bps at 2.154%, 5-Yr is up 0.4bps at 2.468%, 10-Yr is up 1.4bps at 2.857%, and 30-Yr is up 2.9bps at 3.481%.
- UK: The 2-Yr yield is down 2.4bps at 3.747%, 5-Yr is down 0.4bps at 3.955%, 10-Yr is up 3.3bps at 4.517%, and 30-Yr is up 6.1bps at 5.268%.
- Italian BTP spread up 0.7bps at 69.1bps / French OAT up 1.1bps at 72.4bps
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US DATA: WH Press Sec Leavitt Says October CPI/Jobs Unlikely To Be Released
- "*LEAVITT: OCTOBER CPI AND JOBS DATA LIKELY NEVER TO BE RELEASED
- *LEAVITT BLAMES 'PARTISAN POLITICS' FOR SHUTDOWN DATA IMPACTS" - Bloomberg
We're not surprised by that potential no release for CPI, having missed the collection period but the jobs report would be more surprising, especially when it comes to the establishment survey which can more easily be filled in retrospectively being heavily reliant on online submissions. See the MNI Re-Opening guide: https://media.marketnews.com/Shutdown_Restart_Guide_Nov112025_4f06f43a37.pdf
GBPUSD TECHS: Resistance Remains Intact
- RES 4: 1.3471 High Oct 17 and a key short-term resistance
- RES 3: 1.3327 50-day EMA
- RES 2: 1.3223 20-day EMA
- RES 1: 1.3191 High Nov 10
- PRICE: 1.3137 @ 17:12 GMT Nov 12
- SUP 1: 1.3010 Low Nov 4 and 5 and the bear trigger
- SUP 2: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull leg
- SUP 4: 1.2877 1.618 proj of the Sep 17 - 25 - Oct 1 price swing
The trend outlook in GBPUSD remains bearish and recent gains still appear corrective. The move higher has allowed an oversold trend condition to unwind. Firm short-term resistance to watch is at the 20-day EMA, at 1.3223. Clearance of this hurdle would signal scope for an extension towards the 50-day EMA, at 1.3327. For bears, a resumption of the downtrend would open 1.2971, a Fibonacci projection.
US TSYS/SUPPLY: 10Y Note Tails 0.6bp In Refunding, Mixed Peripheral Statistics
The 10Y Treasury Note tailed by 0.6bp at Wednesday's $42B refunding auction, drawing a high yield of 4.074% vs a when-issued yield of 4.068%.
- This is the 2nd consecutive tail for the 10Y and the 3rd in 4 (tailed 1.0bp in August and 0.5bp in October).
- Periphery statistics were mixed: bid-to-cover was 2.43x (lowest since August, prior 5-auction average 2.52x, last 3 refundings average 2.48x) with primary dealer takeup 10.45% (highest since August, 5-auction average 9.86% although this has averaged 13.3% in the prior 3 refundings).
- Directs took 22.55% of competitives (20.11% 5-auction average, down from 24.10% prior) with indirects taking 67.00% (almost exactly in line with 66.80% prior).
- TY futures dropped a tick following the result but have since pared that loss.
- The 10Y reopen is scheduled for Dec 9 ($39B).
