BONDS: EGBs-GILTS CASH CLOSE: Gilts Shine As Rally Extends
The ongoing rally in EGBs and Gilts continued Wednesday, with gains extending to a 3rd consecutive session.
- The German and UK curves both bull flattened on the day, with some spillover from the softer-than-anticipated inflation data in the Eurozone national-level flash reports, though the aggregate Euro-wide reading this morning didn't have much impact having been by now well-anticipated.
- Gains faded by mid-afternoon after a strong US ISM Services report, offset by very mixed job openings/hiring data. Additionally Italy's mandate for a dual tranche syndication weighed across the EGB space.
- Gilts saw one of their best sessions in months, outperforming Bunds, with various factors including a solid UK auction and soft UK construction PMI.
- Periphery / semi-core EGB spreads widened slightly, with Italy and Spain underperforming.
- Thursday's schedule includes the latest BoE DMP survey in the UK,
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1bps at 2.09%, 5-Yr is down 2.6bps at 2.398%, 10-Yr is down 3bps at 2.812%, and 30-Yr is down 3.3bps at 3.447%.
- UK: The 2-Yr yield is down 1.8bps at 3.679%, 5-Yr is down 5.4bps at 3.861%, 10-Yr is down 6.4bps at 4.416%, and 30-Yr is down 7bps at 5.157%.
- Italian BTP spread up 1.1bps at 70.4bps / French OAT up 0.4bps at 71.3bps
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GBPUSD TECHS: Holding On To Recent Gains
- RES 4: 1.3471 High Oct 17
- RES 3: 1.3452 50.0% retracement of the Sep 17 - Nov 4 bear leg
- RES 2: 1.3416 High Oct 21
- RES 1: 1.3385 High Dec 04
- PRICE: 1.3314 @ 16:31 GMT Dec 8
- SUP 1: 1.3264 50-day EMA
- SUP 2: 1.3226 20-day EMA
- SUP 3: 1.3180/25 Low Dec 2 / Low Nov 26
- SUP 4: 1.3038/10 Low Nov 20 / Low Nov 4 & 5 and the bear trigger
A bull theme in GBPUSD remains intact and the pair is holding on to its recent gains. The breach of resistance around the 50-day EMA, at 1.3264, undermines a recent bearish theme and highlights a stronger reversal. This paves the way for an extension towards 1.3452, a Fibonacci retracement point. Initial firm support is seen at 1.3226, the 20-day EMA. A move below this average would be a bearish development.
US: FED Reverse Repo Operation
RRP usage inches up to $1.703B with 6 counterparties this afternoon from $1.485B Friday. Compares to Tuesday November 18: $0.905B - lowest level since mid-March 2021; this years highest excess liquidity measure: $460.731B on June 30.
PIPELINE: Corporate Bond Update: $1.25B BNP Paribas Debt Launched
Date $MM Issuer (Priced *, Launch #)
12/08 $1.25B #BNP Paribas PerpNC8 6.875%
12/08 $750M Level 3 Financing 10NC5 8.5%a
12/08 $600M #Guardian Life 5Y +65
12/08 $500M #Equitable America Global Funding 3Y +70
