BONDS: EGBs-GILTS CASH CLOSE: Long-End UK Rout Continues
Jan-08 2025 17:47
Gilts led a long-end selloff in the European government bond space Wednesday.
- A combination of weaker global long-duration bonds and UK-specific structural issues saw Gilts sell off sharply for a second consecutive session: 10Y yields hit the highest since 2008, with 30Y at fresh post-1998 highs.
- Bunds weakened in sympathy, with the softness in global core FI exacerbated by solid US jobless claims data, as well as dollar gains on overnight reports that Pres-elect Trump would make an emergency tariff declaration.
- Heavy supply also weighed, including Gilt, Bund, and Italian issuance, with French/Spanish auctions anticipated Thursday.
- German Factory orders and retail sales missed versus consensus but this did not move markets.
- Both the UK and German curves bear steepened. Semi-core/periphery EGB spreads narrowed slightly, however.
- Thursday sees the aforementioned supply, plus multiple data points including UK BRC shop price index, DMP inflation expectations, and KPMPG/REC jobs report, along with German trade/regional CPI.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.5bps at 2.201%, 5-Yr is up 2bps at 2.298%, 10-Yr is up 6.6bps at 2.549%, and 30-Yr is up 4.7bps at 2.764%.
- UK: The 2-Yr yield is up 4.5bps at 4.516%, 5-Yr is up 7.4bps at 4.523%, 10-Yr is up 11.3bps at 4.796%, and 30-Yr is up 10.9bps at 5.355%.
- Italian BTP spread down 1.7bps at 113bps / French OAT down 1.8bps at 80.5bps
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ITALY AUCTION PREVIEW: On offer this week
Dec-09 2024 17:44
MEF has announced it will be looking to sell the following BTPs at its auction this Thursday, December 12:
- E2.5-3.0bln of the 2.70% Oct-27 BTP (ISIN: IT0005622128)
- E2.5-3.0bln of the 3.15% Nov-31 BTP (ISIN: IT0005619546)
- E1.0-1.5bln of the 3.35% Mar-35 BTP (ISIN: IT0005358806)
- E0.75-1.0bln of the 4.30% Oct-54 BTP (ISIN: IT0005611741)
BONDS: EGBs-GILTS CASH CLOSE: Twist Steepening With ECB Coming Into View
Dec-09 2024 17:32
European yields were little changed Monday, with the ECB's final decision of the year coming into view.
- Core FI futures softened to start the week's trade, pressured by a risk-positive cross-asset move following a dovish monetary policy stance tweak in China.
- Bunds and Gilts regained ground over the course of the late morning and early afternoon, as European equity and crude oil futures retraced from session highs, but the weakness resumed in the last couple of hours of cash trade with yields closing near the session highs.
- There was no discernable market reaction to an appearance by BoE’s Ramsden, who did not discuss policy rates; he said he wants QT to be "gradual and predictable".
- The German and UK curves each twist steepened, with Bunds modestly underperforming Gilts.
- Periphery/semi-core EGB trade largely mirrored the moves in core markets, with spreads compressing on the day but finishing off tightest levels amid a bit of weakness toward the cash close.
- The week's focus is Thursday's ECB decision (pricing was unchanged Monday, at 27bp of cuts implied), but Wednesday's US CPI release and Friday's UK economic activity data will also bear watching.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.3bps at 1.998%, 5-Yr is up 0.9bps at 1.978%, 10-Yr is up 1.3bps at 2.121%, and 30-Yr is up 3.2bps at 2.348%.
- UK: The 2-Yr yield is down 1.4bps at 4.247%, 5-Yr is down 1.4bps at 4.119%, 10-Yr is down 0.5bps at 4.27%, and 30-Yr is up 1.6bps at 4.824%.
- Italian BTP spread down 0.8bps at 107.7bps / French OAT down 1.4bps at 75.4bps
BOC: Instant Answers For BOC Rate Decision Wednesday
Dec-09 2024 17:21
Following are the Instant Answers for the Bank of Canada interest-rate decision due Wed at 945am EST:
- Overnight Rate Target (level in x.xx%)
- Does the Bank say it’s reasonable to expect further rate cuts?
- Does the Bank say monetary policy is nearing or in the neutral range?
- Does the Bank signal it may slow quantitative tightening?
- Does the Bank say there’s a risk that inflation undershoots the target?
