EGBS: Growth Concerns Drive Steepening Risks To German 5s30s
Jun-08 09:31
The German curve has bear flattened this morning (Bobl yields up 2.5bps, 30-year Bund yields up 2bps), with the latest escalation between Israel and Iran reducing prospects of a near-term US-Iran ceasefire deal. 5s30s is currently 79.5bps, with 75bps presenting the initial downside target to monitor. Although a more protracted conflict raises the prospects of a more aggressive ECB tightening cycle, increased growth risks could dominate in the belly of the curve, presenting steepening risks to the likes of 5s30s.
- Bund futures (RXU6) are -30 ticks at 125.23. Initial support is the May 22 low at 125.08.
- 10-year EGB spreads to Bunds have widened a little versus Friday’s close, with BTPs and GGBs around 1bp wider.
- This morning, German factory orders were much weaker than expected (-3.8% M/M vs -2.0% cons, 4.5% prior), even after excluding large scale orders. The June Sentix survey was a little less negative than feared.
- The ECB decision is on Thursday, with a 25bp hike firmly the base case, leaving focus on updated projections and guidance.
Figure 1: German 5s30s Curve
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MNI: CHINA APR EXPORTS +14.1% Y/Y VS MEDIAN +8.4% Y/Y: CUSTOMS
May-09 02:48
- CHINA APR EXPORTS +14.1% Y/Y VS MEDIAN +8.4% Y/Y: CUSTOMS
- CHINA APR IMPORTS +25.3% Y/Y VS MEDIAN +20.0% Y/Y: CUSTOMS
- CHINA APR TRADE SURPLUS +$84.82 BLN VS MEDIAN +$85.10 BLN
MNI: CHINA APR EXPORTS +9.8% Y/Y IN YUAN TERM: CUSTOMS
May-09 02:46
- CHINA APR EXPORTS +9.8% Y/Y IN YUAN TERM: CUSTOMS
- CHINA APR IMPORTS +20.6% Y/Y IN YUAN TERM: CUSTOMS
- CHINA APR TRADE SURPLUS +CNY585.7 BLN: CUSTOMS
MNI: CHINA PBOC CONDUCTS CNY500 MLN VIA 7-DAY REVERSE REPO SAT
May-09 01:27
- CHINA PBOC CONDUCTS CNY500 MLN VIA 7-DAY REVERSE REPO SAT
