EU REAL ESTATE: HOWOGE (A/AA-) Tap of 30s Guidance
• Guidance: €200m ms+115a
• Books >1.25bn.
• IPT: Exp €200m 3.875 2030 Tap ms+145a
• FV: ms+110a. The existing is screening +111. This gives an opportunity to buy meaningful size unlike the secondary market of a small deal.
• Note: HOWOGE is NOT in the LECPTREU index (Euro Agg Corp). It does sit in LEGATRUU, LBEATREU, LP06TRUE
• The 30s are screening wide to Vonovia. When the deal reaches €500m there may be more liquidity in that line. The 28s and 33s trade inside Vonovia.
• Owned by State of Berlin. €13bn GAV Landlord with 77k Residential Units.
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US 10YR FUTURE TECHS: (M5) Corrective Cycle Remains In Play
- RES 4: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-12 61.8% retracement of the Apr 7 - 11 bear leg
- RES 2: 111-25 50.0% retracement of the Apr 7 - 11 bear leg
- RES 1: 111-22+ High Apr 25
- PRICE: 111-15+ @ 11:21 BST Apr 28
- SUP 1: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
Treasury futures are trading closer to their recent highs. Recent gains are considered corrective and resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg sell-off. Clearance of this level would undermine the bearish theme, and open 112.12, the 61.8% retracement point. On the downside, a resumption of weakness would refocus attention on 109-08, the Apr 11 low and the bear trigger. Clearance of this level would resume the downtrend.
STIR: Fed Rates See A Mild Paring Of Friday’s Rally, In FOMC Blackout
- Fed Funds implied rates are 1-3bp higher from Friday’s close for 2025 meetings amidst broader downward pressure on fixed income.
- It’s a mild paring of the rally seen in the second of last week that continued right up to the weekend.
- The rate path is accordingly firmly within last week’s range with a next Fed cut more than fully priced for the July meeting.
- Cumulative cuts from 4.33% effective: 2bp for next week, 16bp Jun, 35.5bp Jul, 55.5bp Sep and 86.5bp Dec.
- The SOFR implied yield of 3.14% (SFRU6, +2.5bp) remains at familiar levels, still ~25bp lower than pre Apr 2 Liberation Day levels.
- The FOMC is in media blackout ahead of the May 6-7 meeting.
- In case missed late on Friday, Kevin Warsh (frontrunner for the next Fed Chair) said the best way for the Fed to safeguard its independence is for policymakers to avoid expanding the institution's role over time, including wading into policy areas that are outside its core mission. He added the ideas of data dependence and forward guidance widely adopted by Fed officials are not especially useful and might even be counterproductive.
EQUITIES: A busy Earning Schedule this Week
A very busy Week ahead on the Data front, but also a busy Earnings schedule, and big focus on supply chains.
- TUESDAY: Coca Cola, GM, Kraftz, Paypal, Pfizer, Booking, Starbucks, Visa, UPS.
- WEDNESDAY: Caterpillar, Meta, Microsoft, Qualcomm.
- TURSDAY: Eli Lilly, Estee Lauder, Mastercard, Mc Donald, Moderna, Amazon, Apple
- FRIDAY: Chevron, Exxon Mobile.
