OIL: IOC Seek Crude Spot Contract Term Flexibility
Aug-22 07:59
Indian Oil Corp. is seeking more contract term flexibility for spot crude purchases due to “changing scenarios” of the global market, according to Bloomberg sources.
- IOC informed its counterparties that it’s open to discuss swapping cargoes with sellers who won its purchase tenders.
- The request may allow for spot crude purchases based on refinery expectations with the option to swap out purchases on any changes in downstream fuel demand, desired crude selection or supply.
- It is unclear if the new contract terms are related to the recent Russian supply concerns.
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SOFR: Asia Bear Steepening Holds, SFRZ5 Lifted
Jul-23 07:47
A fairly sedate start to London trade for U.S. fixed income contracts, with the Asia bear steepening moves in the long end and SOFR futures STRIP holding.
- SOFR flow headlined by a recent 4K buyer of SFRZ5, paying 96.105.
BUNDS: Commerzbank Expect Good Demand At Today's Auction
Jul-23 07:36
Ahead of today’s Aug-35 Bund tap, Commerzbank write “the auction should meet lively demand as a decent short base has built up in repo, where the Aug-35 is trading relatively expensive”.
GILTS: Bearish Start, Futures In Yesterday's Range
Jul-23 07:30
Gilts open lower, driven by the Japan-centric bearish inputs outlined earlier (Japan-U.S. trade deal, a weak 40-Year JGB auction and questions surrounding the future of PM Ishiba).
- Futures stick within yesterday’s range, basing at 91.70.
- Initial support at yesterday’s low (91.46), with resistance at yesterday’s high (92.15). The recent recovery from lows threatens the bearish technical backdrop.
- Yields 2-5bp higher, curve steeper.
- 10s in the middle of the range in play since late January, last ~4.60%.
- 2s10s and 5s30s remain tethered to 75bp and 140bp, respectively.
- Spread to Bunds 1bp wider at ~199bp.
- GBP STIRs a touch more hawkish than levels we flagged just ahead of the gilt open. SONIA futures flat to -4.5. BoE-dated OIS showing just under 50bp of cuts through year-end, with ~90% odds of a cut priced for next month.
- The DMO will come to market with GBP3bln of the 4.375% Jan-40 gilt this morning, see our recent preview bullet for greater colour on that matter.
- Little of note on the wider UK macro calendar today, which will leave cross-market impulses at the fore for much of the day.
