EGBS: Fresh High For 10-year Bund Yields, Aggressive Curve Flattening In Sep
Sep-24 09:34
10-year Bund yields registered a fresh multi-decade high of 3.58% this morning, with global fixed in...
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GERMAN AUCTION RESULTS: 2.70% Sep-28 Schatz
Aug-25 09:32
| 2.70% Sep-28 Schatz | Previous | |
| ISIN | DE000BU22148 | |
| Total sold | E5bln | E6bln |
| Allotted | E3.828bln | E4.552bln |
| Avg yield | 2.85% | 2.78% |
| Bid-to-offer | 1.14x | 1.04x |
| Bid-to-cover | 1.49x | 1.37x |
| Avg Price | 99.696 | 99.827 |
| Low Price | 99.695 | 99.825 |
| Pre-auction mid | 99.696 | 99.826 |
| Previous date | 04-Aug-26 |
FOREX: Dollar Consolidates Advance, USDJPY Approaches Resistance
Aug-25 09:28
- The dollar index is consolidating on Tuesday, holding Monday’s modest advance that extended its recovery from recent lows to around 0.5%. Both oil prices and precious metals have had a solid pullback during the session, however, this volatility is not being reflected in currency markets, with major pairs holding very narrow ranges as the market continues to assess Middle East risks and awaits US data and the Fed’s Jackson Hole symposium later in the week.
- The short-term bullish tilt for the dollar has seen USDJPY edge a touch higher, with session highs broadly respecting initial resistance at the 20-day EMA. The pair continues to eye a firm resistance zone between 159.54 - 160.15 - the area between the 20- and 50-day EMAs. A breach of it would be a bullish technical development.
- AUD will likely garner some attention as we approach tomorrow’s July CPI release. The RBA minutes were released overnight highlighting that board members saw several upside risks to inflation during their August meeting, including higher oil prices, stronger-than-expected cost pass-through and a larger-than-anticipated AI and data centre investment boom.
- AUDUSD recently matched the 76.4% retracement of the May-June price swing at 0.7180, and this will remain the short-term technical obstacle to further strength.
- USDCAD has modestly extended yesterday’s bump higher following the breakdown in trade talks with the US. Today’s price action has seen USDCAD extend the bounce from Friday’s lows to around 1%. Key resistance is 1.3971, the 50-day EMA.
- US weekly ADP, consumer confidence and new home sales data are all scheduled, while Fed’s Barkin will deliver a speech.
GILTS: Outperforming the German curve following strong auction
Aug-25 09:27
- Gilts started the session under some pressure with comments from US Treasury Secretary Bessent on an "Economic D-Day" and media discussion of further tax rises potentially coming in the Budget weighed on the curve out to around the 10-year area. Comments from Iran that there had been a "fruitful" visit from Pakistan helped the market bottom out and we had been gradually drifting higher since.
- This was helped by a strong auction of the 4.125% Mar-33 gilt where the auction price was notable above prices in the secondary market, indicating strong demand for gilts at auction. Furthermore, there was seemingly little pushback at yesterday's GEMM / investor meetings regarding holding the long-dated auction that is pencilled into the calendar for 13 October. This is another positive for the gilt market - we note that long-dated auction will be around two weeks ahead of the Budget and hence depending upon its success the DMO will have the possibility to assess whether there is appetite to hold the final two long-dated auctions that are currently scheduled for the Jan27-Mar27 period.
- Following the auction, have been outperforming Bunds on the day across the curve.
- At the time of writing, gilt futures are up 0.17 today at 864.42 with 10y yields down -1.9bp at 5.034% and 2y yields down -2.3bp at 4.352%.
