EU-RUSSIA: Foreign Ministers Meet w/20th Sanctions Package On Agenda

This morning, Germany will hold its ninth and final green auction of the year.

• On offer will be E750mln of the 2-year 1.30% Oct-27 Green Bobl (ISIN: DE0001030740) alongside E750mln of the 10-year 2.50% Feb-35 Green Bund (ISIN: DE000BU3Z047).
• The combined E1.5bln size will put total 2025 German green funding at E14.5bln (versus a target of E13-15bln).
• Contrary to large parts of the German curve in the conventional segment, the German green segment has seen solid demand metrics throughout most of 2025 with no recent deterioration, with bid-to-covers ranging between 1.32x to 3.76x and bid-to-offers ranging between 1.05x and 3.75x this year. Pre-auction midprices were above the lowest accepted prices achieved at the auctions throughout the year.
• However, it is also important to note that the auction metrics for green auctions have been helped by the auctions being generally of smaller sizes than for non-Green issues.
• The 1.30% Oct-27 Green Bobl was last issued in January 2024 and saw a 2.24x bid-to-cover and a 2.14x bid-to-offer. The 2.50% Feb-35 Green Bund meanwhile was last issued more recently, in the last German green auction on September 9, with a 1.91x bid-to-cover and a 1.62x bid-to-offer.
• The next German auction will be tomorrow's E3.0bln of the 7-year 2.50% Nov-32 Bund (ISIN: DE000BU27014).
• Timing: Results will be available shortly after the bidding window closes at 10:30BST / 11:30CET.

The Gilt curve has bull flattened after September public finance data was a little better than expected. 2-year Gilt yields are little changed, with 30-year yields down 2.5bps ahead of today’s 30-year green gilt supply. 

• The 5s30s curve is down 1.9bps, at 133.5bps. Initial support is Friday’s 130.6bp low.
• Gilt futures are +18 ticks at 92.85, off opening highs of 92.92. A bull cycle remains intact, with initial resistance at last Friday’s 93.17 high. This shields the 1.236 proj of the Sep 3 - 11 - 26 price swing at 93.30.
• This morning’s September PSNB figure was lower than expected at GBP20.2bln (vs 20.8bln cons). Taken alongside the downward revision to August, the OBR’s tracking error has fallen to GBP7.2bln. Despite PSNBex coming in GBP0.7bln below consensus it was GBP0.1bln higher than the OBR forecast. As a reminder, these will be the last numbers that will be incorporated in the OBR's EFO forecasts which will be used for the Budget. The numbers aren't as bad as had been expected, but they continued to track above OBR forecasts
• The DMO will sell GBP1.5bln nominal of the 1.50% Jul-53 green gilt this morning. See above for our full auction preview.
• This week’s MPC appearances are limited to Bailey and Breeden testifying ahead of the Lords Select Financial Services Regulation Committee today. This is not necessarily the forum for Bailey to discuss anything on monetary policy – and he’s unlikely to say any more on the topic than he did last week.
• Mann is also due to speak this evening but given she has already argued in favour of a skip, it would be very surprising if there was anything market moving or new in her remarks.
• Focus remains on tomorrow’s September inflation data.

• The DMO will kick off issuance for the week this morning with its final long-dated auction of the year with GBP1.5bln nominal of the 1.50% Jul-53 green gilt on offer (ISIN: GB00BM8Z2V59).
• This may well be the final auction of this issue as the auction will bring the outstanding volume above GBP30bln.
• In cash terms the auction is likely to be small, however, with a bit under GBP700mln likely to be raised based on current pricing.
• The last long-dated gilt auction was a month ago with GBP1.5bln nominal of the on-the-run 5.375% Jan-56 gilt sold. The auction was soft with the lowest accepted price of 98.301 being below the pre-auction mid-price of 98.461 and a wide tail of 1.4bp.
• The last auction of the 1.50% Jul-53 green gilt was also soft (on 1 July) with GBP2.0bln nominal sold (more than on offer this week) but again seeing the lowest accepted price below the pre-auction mids and a tail of 0.8bp.
• Given these soft results, we would expect the market will price in a weightier concession going into the auction.
• Timing: Results will be available shortly after the bidding window closes at 10:00BST. As this is a green gilt there is no PAOF.