EGBS: German 5s30s Meets Resistance Again; 2026 Issuance Details Needed
Nov-18 10:35
The German 5s30 curve has once again met resistance around 103.7bps, a level which has contained upside on several occasions since mid-September. Although the 2026 German budget (passed last week) contained higher net debt than initial drafts, markets are still awaiting details on how the expected issuance ramp-up will be distributed across the curve. As such, details of DFA’s 2026 issuance plan (usually presented in mid-December) may be necessary before 5s30s can make a fresh challenge of year-to-date highs of 111bps.
- Renewed interest in long-end swap spread/ASW wideners on Dutch pension fund dynamics may have also played a role (even with spreads a touch off recent highs at typing). The EUR 5s30s swap curve (vs 3m Euribor) is currently at a fresh multi-year high of 70.5bps.
- Intraday, the curve is bull steeper, with 5-year yields down 2.5bps and 30-year yields little changed.
- Bund futures are +17 ticks at 128.82, seemingly finding support from a continued pullback in European equities (though we caveat that these correlations have not been too reliable in recent sessions). Initial resistance in Bunds is seen at the 50-day EMA of 129.10.
- 10-year EGB spreads to Bunds are up to 1.5bps wider. The OAT/Bund spread is back at 75bps, with political developments still in focus.
- The EU is holding a syndicated tap (E5bln WNG) of the 2.50% Oct-30 EU-bond today. Meanwhile, Slovakia sold SlovGBs and Finland will sell RFGBs at 1100GMT.
- There is no regional data scheduled today, while the only remaining ECBspeak comes from Bank of Slovenia’s Dolenc.
Figure 1: German 5s30s Curve
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
