EU CREDIT UPDATE: € Credit Close
Jan-10 16:20
- Bunds are closing 1-4bp wider with 2y/10y yields at 2.26%/2.58%. Yields spiked again on NFP but mostly retraced after a weak run YTD.
- €IG closes -0.7bp on average. FERSM 30 is -6bp following yesterday’s issuance. SESGFP is down another ~50c. Banks were firm in places.
- SXXP/SPX are -0.6%/-1.3% at 513pts/5842pts. €IG movers include Mercedes-Benz Group AG (+4%), Jefferies Financial Group Inc (-11%), Elia Group SA/NV (-6%), Brown-Forman Corp (-5%), Warner Bros Discovery Inc (-5%).
- Main/XO close +0.8bp/+4bp at 58.1bp/314bp.
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US TSYS/SUPPLY: Preview 10Y Note Auction: Re-Cheapening, Re-Steepening
Dec-11 16:16
Treasury will auction $39B in 10Y Note (reopen, CUSIP: 91282CLW9) at 1300ET Wednesday.
- 10Y yields have pulled back significantly since the last auction, with the current when-issued of 4.243% comparing to the November refunding's 4.347% high yield hit on Election Day. Today's highly-anticipated CPI report initially pared the available concession, with WI yields dipping below 4.20% as December Fed cut pricing was bolstered by the major inflation categories coming largely in-line with expectations.
- However that move has faded in the hours since the release, with long-end yields bouncing back from intraday lows as we approach the auction.
- Relative value-wise, price action has worked in a concessionary direction for today's auction.
- The curve has steepened: 2s10s are up 2.8bp on the day, at 10.7 having flirted with re-inversion in late Nov for the first time since early September; 5s10s are 1.5bp higher on the day (13.4bp the steepest in a month), While the curve as a whole has steepened - 10s30s are up 1.3bp to 20.4bp, highest since late Oct - 10s have been steady on the 5s-10s-30s fly (-6.7bp last) since late November, though richer vs levels early last month (closer to -2bp).
- The last several auctions have been mixed, alternating between tails and trade-throughs since July (last trading-through 0.3bp in Nov), with the 5-auction average seeing a 0.2bbp tail (heavily influenced by August's 3bp tail). 5-auction average stats include 2.52x bid-cover (2.58x last), 13.7% primary dealer takedown (14.7% last), with indirects taking 69.8% (61.7% last) and directs 16.5% (23.6%). See table below.
| High yield | When-issued yield | Trade through (tail) | High - Median Spread | Bid-to-cover | Primary Dealer Percent | Indirect Percent | Direct Percent | Offering Amount | |
| 5 Auct. Avg | 4.059% | 4.058% | -0.2 | 5.8 | 2.52 | 13.66% | 69.82% | 16.52% | 40.2 |
| 5-Nov-24 | 4.347% | 4.350% | 0.3 | 5.7 | 2.58 | 14.72% | 61.66% | 23.62% | 42 |
| 9-Oct-24 | 4.066% | 4.061% | -0.5 | 5.8 | 2.48 | 13.93% | 77.63% | 8.44% | 39 |
| 11-Sep-24 | 3.648% | 3.662% | 1.4 | 4.3 | 2.64 | 10.25% | 76.05% | 13.71% | 39 |
| 7-Aug-24 | 3.960% | 3.930% | -3.0 | 7.2 | 2.32 | 17.88% | 66.17% | 15.95% | 42 |
| 10-Jul-24 | 4.276% | 4.285% | 0.9 | 5.8 | 2.58 | 11.53% | 67.61% | 20.86% | 39 |
FED: US TSY 17W AUCTION: NON-COMP BIDS $604 MLN FROM $64.000 BLN TOTAL
Dec-11 16:15
- US TSY 17W AUCTION: NON-COMP BIDS $604 MLN FROM $64.000 BLN TOTAL
EU-RUSSIA: U-Turn As 15th Sanctions Package Agreed After Initial Reservations
Dec-11 16:03
In what represents an about-turn, the Hungarian presidency of the Council of the European Union has announced that member state ambassadors to the EU have agreed on a 15th package of sanctions to be imposed on Russia by the Union in response to the invasion of Ukraine. Initially, it appeared as though envoys were set to reject the latest sanctions package over disagreements regarding divestiture from Russian oil and oil products.
- However, posting on X the Hungarian presidency said as part of the agreed sanctions, "The package adds more persons and entities to the already existing sanctions list, and targets entities in Russia and in third countries other than Russia that indirectly contribute to Russia’s military and technological enhancement through the circumvention of export restrictions. The adopted sanctions constrain the activity of additional vessels of third states operating to contribute or support actions or policies supporting Russia’s actions against Ukraine."
- Reuters reports that "the package also includes an extension of six months for the Czech Republic to import Russian oil-based products coming mainly through Slovakia", seen as a sticking point in earlier talks. The 15th package is set to be formally approved at a Foreign Affairs Council meeting of foreign ministers on 16 Dec.
- Bloomberg: "As part of the package, the EU proposed adding to the sanctions list several Chinese entities and a Chinese national, who controls a company that has breached EU trade restrictions;"
