GILTS: Holding Firmer
Apr-18 09:25
Gilts remain underpinned as yesterday’s recovery extends, with bulls pushing the contract as high as 97.20, before a fade to 97.05.
- Yields are 3-5bp lower, bull steepening seen on the curve.
- Adjustments to late Wednesday developments in wider core global FI markets and lower benchmark energy prices dominate, even as geopolitical angst eases a little (granted, that is the driver of lower energy prices today).
- Futures have cleared initial technical resistance, with little in the way of meaningful upside technical levels seen until the April 12 high (98.23).
- Still, bears remain in technical control as long as the contract trades below the April 12 peak.
- SONIA futures hold firmer in the main, although sit a little shy of best levels, last flat to +6.5.
- BoE-dated OIS sits off the most dovish levels of the session, but are still comfortably off post-CPI extremes, showing ~45bp of ’24 cuts.
- Sell-side names continue to adjust BoE calls in lieu of the recent UK data.
- BoE’s Greene will speak again today, but we have heard from her on several occasions over the last week or so.
- That will likely leave focus on cross-market and macro matters.
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Historical bullets
USD: Testing broader highs
Mar-19 09:25
- The Dollar is still going, albeit nothing fast and 1 pip at a time, but prints new high against the CNY, MYR, AUD, NZD, SEK, NOK, SGD, HKD, MXN.
- The immediate support in Cable noted earlier at 1.2684 50-day EMA has so far held, printed a 1.2684 low.
- The EURUSD did break the 1.0859 50-day EMA, but has lacked momentum, and remains in a 35 pips range.
US TSYS: TY Sticks to Asia Range, Little Movement Post-BoJ
Mar-19 09:22
TYM4 +0-04 at 109-30, sticking to the 0-06 range established in Asia-Pac hours, volume running at a healthy ~247K.
- Contract above yesterday’s low (109-24+), which provides initial support.
- Initial firm resistance at the 50-day EMA.
- Cash Tsy yields little changed to 1bp lower.
- Fed pricing steadies after the recent removal of rate cut premium.
- FOMC-dated OIS fully discounts a 25bp cut through the July meeting, with ~70bp of cuts priced through year end.
- thatClick for our preview of tomorrow’s FOMC decision.
- A reminder that US lawmakers have reached a funding deal to avert a partial government shutdown, with the agreement funding the government through Sep 30.
- Building permits & housing starts data will cross in NY hours, with 20-Year Tsy supply also due.
EUROZONE ISSUANCE: German Q2 Issuance Update
Mar-19 09:17
- DFA has announced that there are no changes to the previously announced auction schedule for Q2 for Bubills, Schatz, Bobls and Bunds. This is as expected.
- There is no updated guidance on syndications (the annual guidance included a E12bln target including at least one green tap). E10.5bln has already been raised through the launch and tap of the 2.50% Aug-54 Bund (leaving just E1.5bln of the original E12bln available).
- The DFA has also confirmed one of each Bund on offer at each multi-ISIN auction in the quarter:
- 17 April: E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004) alongside E1bln of another issue.
- 15 May: E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614) alongside E1bln of another issue.
- 29 May: E1.5bln of the May-41 Bund (ISIN: DE000BU2F009) alongside E500mln of another issue.
- 19 June: E1bln of the 2.50% Aug-54 Bund (ISIN: DE000BU2D004) alongside E1bln of another issue.
