EGBS: /GILTS CASH CLOSE: Session Lows On Trade Optimism And A Hawkish BoE Cut
May-08 16:19
- EGBs and Gilts have extended session lows along with equity futures firming through US President Trump’s press conference on the US-UK trade deal.
- Gilts led the sell-off, with moves extending a sharp reaction to a more hawkish than expected BoE earlier today. The latter is clear to see in today’s bear flattening:
- 2Y yields: 12.5bp Gilts, +5.9bp Bunds, +5.3bp OATs, +4.2bp BTPs and +5.4bp for Spain.
- 10Y yields: 8.7bp Gilts, +5.9bp Bunds, +4.3bp OATs, +3.4bp BTPs and +4.5bp for Spain.
- The firmer risk back-drop has supported the periphery, with GGBs 3.5bp tighter and BTPs 2.5bp tighter to Bunds. IRISH leads however at 4.2bp tighter, aided by strong demand at today’s 2034 sale (2x sold vs prior offering) and the trade backdrop considering Ireland’s particular sensitivity.
- BTP-Bund spreads are one standout more broadly, at 104.6bps being right at the low end of recent ranges and last lower in late 2021.
- RXM5 has recently touched session lows of 130-91 (-0.60) to reverse most of yesterday’s gains which saw a high of 131.72. The trend needle has been pointing north, with resistance at a bull trigger of 132.03 (Apr 7 high) but should today’s decline become more entrenched it could see support at 130.58 (50-day EMA).
- EU-focused trade headlines following the US-UK deal: "*TRUMP: WE INTEND TO MAKE A DEAL WITH THE EU […] HOPE TO MEET EUROPE'S VON DER LEYEN” - bbg
- When asked more broadly rather than just EU: *TRUMP: 10% BASE RATE FOR UK NOT A TEMPLATE, WILL BE HIGHER”.
- Earlier today, Bloomberg reported the EU is planning to hit €95 billion of US exports with additional tariffs if ongoing trade talks with Trump’s team fail to yield a satisfactory result.
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OPTIONS: Larger FX Option Pipeline
Apr-08 16:19
- EUR/USD: Apr10 $1.0900-10(E2.6bln), $1.0935-50(E2.4bln); Apr11 $1.0950-60(E1.1bln), $1.1000(E1.3bln)
- USD/JPY: Apr09 Y147.40-50($1.1bln); Apr10 Y143.00($1.3bln)
- EUR/GBP: Apr09 Gbp0.8405-20(E1.1bln)
- AUD/USD: Apr10 $0.6400(A$1.3bln)
- USD/CAD: Apr10 C$1.4395-00($1.5bln); Apr11 C$1.4045($1.6bln)
- USD/CNY: Apr10 Cny7.4000($1.4bln)
LOOK AHEAD: Wednesday Data Calendar: March FOMC Minutes, Fed Speak
Apr-08 16:17
- US Data/Speaker Calendar (prior, estimate)
- 09-Apr 0700 MBA Mortgage Applications (-1.6%, --)
- 09-Apr 1000 Wholesale Inventories MoM (0.3%, 0.4%)
- 09-Apr 1000 Wholesale Trade Sales MoM (-1.3%, 0.8%)
- 09-Apr 1100 Richmond Fed Barkin at Economic Club Washington
- 09-Apr 1130 US Tsy $60B 17W bill auction
- 09-Apr 1300 US Tsy $39B 10Y note re-open (91282CMM0)
- 09-Apr 1400 FOMC Meeting Minutes for March meeting
PIPELINE: Corporate Bond Roundup: $4.2B Paychex 3Pt Launched
Apr-08 16:12
First corporate bond issuance since last Wednesday:
- Date $MM Issuer (Priced *, Launch #)
- 04/08 $4.2B #Paychex Inc $1.5B 5Y +125, $1.5B 7Y +135, $1.2B 10Y +145
