EGBS: German Curve Resumes Steepening Bias
With the ECB and Germany’s 2026 issuance plan now in the rear view, the German curve has resumed its steepening bias. 2-year yields are up 1bp today, while 30-year yields are now up almost 5bps. 30-year Bunds over just below resistance at 3.55%, clearance of which would expose 3.60%. Meanwhile, 10-year yields are up 3,5bps and threatening another test of the 2.90% figure.
- Bund futures are -35 ticks at 127.22. Futures are currently in consolidation mode, with a broader bear cycle still intact. Initial support is the Dec 10 low of 127.05.
- Today’s regional data hasn’t been market moving. The ECB’s forward looking wage tracker continues to point to downside pay pressures next year. Meanwhile, national central banks have been releasing their updated macroeconomic projections following the ECB’s December decision.
- Several ECB policymakers have spoken today, most sticking to President Lagarde’s press conference script. Villeroy flagged downside inflation risks.
- In France, the Joint Committee has been unable to reach an agreement on the 2026 state budget (PLF), meaning the Government cannot pass its full budget before year-end. As such, the Government is expected to introduce a special bill to ensure the continuity of operations while budget negotiations restart/resume in the new year). The 10-year OAT/Bund spread widened modestly (~0.9bps) since the news broke, now 0.5bps wider on the session at ~71bps. The 70bp figure continues to contain downside in the spread for now, and failure to pass a budget may keep this support intact into the start of next year.
- Eurozone December consumer confidence is due this afternoon, with ECB Chief Economist Lane also scheduled to speak.
Figure 1: 30-year Bund Yield - Quarterly (Source: Bloomberg Finance L.P)
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EGBS: German 5s30s Testing Resistance
The German curve has twist steepened, helping 5s30s make another test of resistance around 103.7bps. A push through this level would expose March’s multi-year high of 111bps. German yields are within 1bp of yesterday’s closing levels, with EUR rates potentially requiring catalysts from regional data (e.g. Friday’s flash PMIs) and/or 2026 issuance plans (particularly in Germany) to drive more material repricing.
- Cumulative volumes in Bund futures have only just crossed 200k, below recent averages. Futures are little changed on the session at 128.72, with support at 128.41 untested this week.
- The 10-year BTP/Bund spread is 1bp narrower at 74bps, but remains above Monday’s tightest levels. Italy held a E5bln buyback transaction this morning.
- Eurozone October flash HICP confirmed flash estimates. Core HICP was 2.37% Y/Y (vs 2.35% prior). The Dutch Government has handed back control of Nexperia to its Chinese owner, mitigating a potentially inflationary supply chain risk.
- Focus turns to this evening’s FOMC minutes and the eagerly anticipated Nvidia Q3 earnings after the close.
BONDS: UK and US Treasuries Roll Views (updated)
UK & Treasury Roll Views are mixed: Also be aware that next Week (27th Nov) is US Thanksgiving Day, so Pace could really pick up Post NFP Tomorrow.
JPM:
- WNA: Mildly Bullish.
- USA: Mildly Bullish.
- UXY: Neutral.
- TYA: Neutral.
- FVA: Neutral.
- TUA: Neutral.
- Gilt: Bullish.
MS:
- WNA: Mildly Bearish.
- USA: Neutral.
- UXY: Bearish.
- TYA: Mildly Bearish.
- FVA: Mildly Bearish.
- TUA: Neutral.
DB:
- WNA: Bearish.
- USA: Bullish.
- UXY: Neutral.
- TYA: Neutral.
- FVA: Bearish.
- TUA: Bullish.
Soc Gen:
- WNA: Mildly Bearish.
- USA: Neutral.
- UXY: Neutral.
- TYA: Mildly Bearish.
- FVA: Bearish.
- TUA: Mildly Bearish.
UBS:
- Gilt: Bearish. Their positioning CTA monitor sees moderate long positions in the Front Month. They see fair value in the G Z5/H6 spread at 152.
ITALY AUCTION RESULTS: Buyback Results
MEF has bought back:
- E1.181bln of the 3.50% Jan-26 BTP (ISIN: IT0005514473) at price 100.172.
- E0.825bln of the 0% Apr-26 BTP (ISIN: IT0005437147) at price 99.258,
- E1.294bln of the 3.80% Apr-26 BTP (ISIN: IT0005538597) at price 100.653.
- E0.667bln of the 3.85% Sep-26 BTP (ISIN: IT0005556011) at price 101.370.
- E1.033bln of the Apr-26 CCTeu (ISIN: IT0005428617) at price 100.209.
