SWAPS: EUR Swap Rates Follow Bond Yields Lower, Dutch Flows Still Eyed
Feb-13 08:30
30- & 50-Year EUR swap rates are nearly 10bp lower on the week, alongside the rally in bonds, EUR10s30s curve is little changed.
- While cross-market inputs are eyed, most of the focus remains on the Dutch pension transition.
- We have previously flagged the crowded nature of paid/steepener positioning in the long end as markets look to profit from the Dutch switch to defined contribution from defined benefit schemes.
- The trade fared well for much of ’25, before disappointment surrounding the lack of meaningful market footprint related to the January transition and one of the larger funds (PFZW) declaring higher-than-expected hedging intentions helped long end swap rates and curves back from cycle highs.
- Looking forwards, structural pay-side & steepener risks remain evident in the long end, but any such moves are unlikely to come in a straight line, with positioning seemingly remaining heavy.
- ING remind us that for “PMT (~EUR80bln of assets), the transition period is planned for H126 and should still bring some flows. PFZW (~EUR250bln assets), is more secretive about its transition strategy”.
- Further out, ING note that “almost EUR1tln of Dutch pension assets are scheduled to transition in ‘27, but we should start seeing the impact on markets this year”. They touch on this year’s example, with a Dutch pension news vendor suggesting that many smaller funds rebalanced in December ‘25 (or earlier) instead of waiting until their transition date in January. One interviewee noted that “the reduction of our interest rate hedge went very smoothly, at much lower costs than anticipated".
- Regulatory guidance had already pointed to a greater degree of flexibility re: the adjustments.
- The piece noted that the hedge unwind wasn’t as large as many had assumed, with some funds actually increasing their hedging provision, seemingly owing to the move higher in rates in late ’25.
- The article also notes that peer-to-peer OTC exposure switches lessened some of the market impact.
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EGB SYNDICATION: Ireland 10-year Jun-36 : Guidance
Jan-14 08:29
- Size: EUR benchmark (MNI expects E3-4bln)
- Guidance: MS +28bps area
- Coupon: Short first
- Maturity: 18 June 2036
- ISIN: IE000O6GBYC9
- Bookrunners: Barclays (B&D/DM), BofA Securities, Cantor Fitzgerald Ireland, Goodbody, J.P. Morgan and NatWest
- Settlement: 21 January 2026 (T+5)
- Timing: Books open, today's business
From market source / MNI colour
GILTS: Bullish Theme Intact
Jan-14 08:26
Gilts edge lower with core global FI pulling back from highs.
- Futures -14 at 92.21. Bulls remain in technical control after the break of several key resistance levels last week. Resistance is now layered in at 92.62/72/91, while initial support is located at 91.84.
- Yields flat to +1bp. The ’25 low in 10s (4.363%) remains untested and protects the base of the upward sloping triangle we have previously identified (4.339% today).
- Comments from BoE MPC member Taylor reaffirm his well-known dovish stance. He noted that “we can now see inflation at target in mid-2026, rather than having to wait until 2027 as in our previous projection. I see this as sustainable, given cooling wage growth, and I now therefore expect monetary policy to normalise at neutral sooner rather than later, as I said in the December minutes. Interest rates should continue on a downward path, that is if my outlook continues to match up with the data, as it has done over the past year”.
- No related movement in GBP STIRs given Taylor’s already well-defined dovish stance, SONIA futures incrementally more hawkish as the long end softens. BoE-dated OIS shows ~44bp of easing through Dec, little changed.
- On the supply front, the DMO will come to market with GBP4.5bln of the 4.75% Oct-35 line this morning.
Fig. 1: UK 10-Year Gilt Yields (%)
Source: MNI - Market News/Bloomberg Finance L.P.
SILVER TECHS: Impulsive Bull Wave
Jan-14 08:24
- RES 4: $96.226 - 1.764 proj of the Dec 31 - Jan 7 - 8 price swing
- RES 3: $94.374 - 1.618 proj of the Dec 31 - Jan 7 - 8 price swing
- RES 2: $92.878 - 1.500 proj of the Dec 31 - Jan 7 - 8 price swing
- RES 1: $91.554 - High Jan 12
- PRICE: $89.896 @ 08:23 GMT Jan 14
- SUP 1: $79.920/74.624 - Low Jan 12 / 20-day EMA
- SUP 2: $70.071 - Low Dec 31
- SUP 3: $65.350 - 50-day EMA
- SUP 4: $60.815 - Low Dec 12
Trend signals in Silver remain bullish. This week’s rally reinforces bullish conditions. The move higher maintains the price sequence of higher highs and higher lows. Note too that MA studies are in a bull-mode position highlighting a dominant medium-term uptrend. Price has traded through the $90.00 handle. This paves the way for an extension towards $92.878 next, a Fibonacci projection. Support to watch is $74.624, the 20-day EMA.
