BONDS: EGBs-GILTS CASH CLOSE: German Short-End Remains Under Light Pressure
Dec-10 17:41
European yields rose slightly Wednesday.
- The German curve saw light bear flattening with continued short-end underperformance as ECB hike pricing edging higher for 2026 despite some pushback against that notion by ECB's Villeroy and Simkus.
- That helped drag on the UK short-end/belly as well. Overall on the day though the German short-end underperformed its UK counterpart; vice-versa for the long-end.
- In a session limited on data and macro developments, softer-than-expected US employment cost data helped global core FI recover from early session lows. ECB's Kazaks told an MNI Connect event that monetary policy remains in a "good place" with no need to act in December.
- Periphery/semi-core EGB spreads were little changed on the day, with OAT spreads closing slightly wider despite the French National Assembly passing the 2026 Social Security budget after Tuesday's close.
- Attention after the cash close will be on the US Federal Reserve decision; Thursday's calendar includes the SNB decision.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2.3bps at 2.177%, 5-Yr is up 1bps at 2.476%, 10-Yr is up 0.1bps at 2.851%, and 30-Yr is down 0.6bps at 3.453%.
- UK: The 2-Yr yield is up 0.5bps at 3.79%, 5-Yr is up 1.1bps at 3.983%, 10-Yr is up 0.1bps at 4.506%, and 30-Yr is up 1bps at 5.205%.
- Italian BTP spread up 0.1bps at 69.6bps / French OAT up 0.3bps at 71.6bps
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US: Speaker Johnson Eyes Wednesday House Vote On Senate Funding Package
Nov-10 17:39
House Speaker Mike Johnson (R-LA) told House Republicans during a private conference call today that GOP leadership is aiming for a Wednesday vote on the Senate funding package to reopen the government. According to Mychael Schnell at MCNBC, Johnson urged House Republicans to begin travelling back to Washington, DC, immediately, in light of shutdown-related travel issues.
- As noted in previous bullet, a Wednesday vote in the House will depend on Senate Majority Leader John Thune (R-SD) gaining unanimous consent to speed up final passage in the Senate. Because Senate Democrats can no longer block the package, there is little to gain politically from slowing down the process. See: US: Senate Convenes To Work On Funding Package, Focus On Time Agreement
- The Washington Post notes that House Minority Leader Hakeem Jeffries (D-NY) 'trashed' the Senate deal during a Capitol Hill press conference, but defended Senator Minority Leader Chuck Schumer (D-NY). The prevailing view is that a handful of moderate House Democrats could vote in favour of the package, ensuring its passage to President Donald Trump's desk.
- Marianna Sotomayor at the Post notes on X: "There is no formal whip count, but Democrats speculate maybe five lawmakers support the Senate bill - & that's a big if. A majority of lawmakers are mad they fought to get nothing, and worry that House GOP leadership won't guarantee a healthcare vote. So what's the point?"
PIPELINE: Corporate Bond Update: $900M Mosaic Launched, Verizon Guidance Updated
Nov-10 17:22
- Date $MM Issuer (Priced *, Launch #)
- 11/10 $900M *Mosaic $500M +3Y +77, $400M 5Y +92
- 11/10 $Benchmark Verizon** 5pt: +7Y +90, +10Y +100, 20Y +110, 30Y +120, 40Y +130
- 11/10 $Benchmark Enterprise Products Operating 3Y Tap +70a, 5Y Tap+95a, 10Y tap +120a
- 11/10 $Benchmark Plains All American 5Y +130a, 10Y +170a
- 11/10 $Benchmark LyondellBasell 5Y +147, 10Y +185
- 11/10 $Benchmark Caterpillar 3Y +62.5a, 3Y SOFR
- 11/10 $Benchmark Flex 7Y +130a, 10Y +155a
- 11/10 $Benchmark AutoNation +3Y +115a
- 11/10 $700M Carpenter Tech 8.25NC3.25
- 11/10 $500M Illumina WNG 5Y +125a
- ** Note on Verizon is in the top 10 largest issuers on record TWICE. At number 1: $49B on Aug 11, 2013, followed by $25B over 9 tranches on March 11, 2021. Today's issuance may not be as robust, but an estimated $10B from Verizon over 5 tranches not unlikely.
- 11/10 $2.35B Applied Digital 5NC2 investor call, expected to launch Thursday
US 10YR FUTURE TECHS: (Z5) Bear Threat Still Present
Nov-10 17:12
- RES 4: 114-02 High Oct 17 and the bull trigger
- RES 3: 113-29 High Oct 22
- RES 2: 113-18+ High Oct 28
- RES 1: 113-02 High Nov 5& 7 and a key near-term resistance
- PRICE: 112-22 @ 17:02 GMT Nov 10
- SUP 1: 112-09+ Low Nov 5
- SUP 2: 112-08+ 38.2% retracement of May - Oct Upleg
- SUP 3: 112-07+/06 100-dma / Low Sep 25 and a reversal trigger
- SUP 4: 112-01+ Trendline support drawn from the May 22 low
Treasuries are trading below last week’s high and closer to recent lows. This highlights a bear threat and attention is on a reversal trigger at 112-06, the Sep 25 low, and the 100-DMA, at 112-07+. A clear break of these price points would expose a trendline support at 112-01+. The trendline is drawn from the May 22 low. Resistance to watch is 113-02, the Nov 5 and 7 high. Clearance of this level would highlight a potential bullish reversal.
