EQUITIES: EU Bank stock option
Jul-07 10:53
SX7E 16th Dec 80/100cs 1x2, trades 4.00 in 10k
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BOND SUMMARY: EGB/Gilt: UK PM Lumbers On
Jun-07 10:48
Euro area government bonds have traded firmer this morning, while gilts have traded mixed. Equities are broadly lower across the region, as is FX vs the dollar.
- UK Prime Minister Boris Johnson survived a no-confidence vote yesterday evening by a comfortable margin (211 vs 148). However, this still means that around 40% of his own party have declared that they have no confidence in Johnson's leadership, suggesting the possibility of further instability in the near term.
- The final estimates of the May Services and Composite PMIs for the UK were higher than the initial readings (53.4 vs 51.8 and 53.1 vs 51.8, respectively)
- Gilts have lacked clear direction so far, while the curve has slightly twist flattened.
- Germany Factory orders disappointed in April (-6.2% Y/Y vs -4.1% expected).
- Bunds have inched higher with yields down 1-2bp across much of the curve.
- OATs have slightly outperformed bunds, with yields down 2-3bp across most of the curve and the 2s30s spread narrowing 3bp.
- BTPs have outperformed core EGBs. Cash yields are 1-5bp lower on the day with the belly of the curve leading the way.
- Supply this morning came from the UK (Gilt, GBP3.00bn), Geramny (ILBs, EUR586mn allotted), Spain (Letras, EUR4.928bn), Belgium (TCs, EUR1.155bn), Netherlands (DTCs, EUR2.72bn), Austria (RAGBs, EUR1.2bn allotted) and the ESM (Bills, EUR1.056bn). In addition, Spain is selling EUR8bn of a 10-year bond with books last seen above EUR40bn).
US TSYS: Treasuries Follow Europe Richer, 3Y Auction
Jun-07 10:47
- Cash Tsys in the European session have more than unwound a net cheapening overnight through a combination of a dovish BoJ pledging a continuation of easing to support the economy and a hawkish RBA surprisingly hiking 50bps.
- The driving force appears to be Europe and Germany in particular, where yields have pulled back from yesterday’s new cycle highs (since 2011 for 2Y, 2014 for 10Y).
- Despite rallying, Tsy yields still sit above 3% through 5-30Y tenors: 2YY -1.6bps at 2.710%, 5YY -2.6bps at 3.008%, 10YY -2.6bps at 3.014% and 30YY -3.2bps at 3.164%.
- TYU2 sits 6 ticks higher at 118-03 in a return on above average volumes. It’s still well within yesterday’s range though as it continues to suggest the corrective cycle since May 9 is over whilst notably below the 50-day EMA of 120-04+. The intraday low of 117-22+ forms initial support after which it could ultimately open a bear trigger at 116-21 (May 9 low).
- Data/speak: Trade balance and consumer credit plus Tsy Sec Yellen speaks at the Senate Budget hearing at 1000ET.
- Bond issuance: US Tsy $44B 3Y note auction (91282CEU1) – 1300ET
EGB SYNDICATION: Spain 10y: Final terms
Jun-07 10:35
- Size set at E8bln (in line with MNI expectation)
- Final spread set earlier at 0.70% Apr-32 +11bp (guidance was +12bp area)
- Maturity: October 31, 2032
- Books in excess of E40bln (inc JLM interest)
- Coupon: Annual, act/act, short first
- Settlement: June 14, 2022
- Bookrunners: Barclays, BBVA, CA-CIB, DB, JPM (B&D), MS
Source: Bloomberg
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