BONDS: J.P.Morgan Survey Shows Investors Trimming EGB Periph & Gilt Exposure
J.P.Morgan’s latest European client survey reveals that “multi-currency European real money investors kept their long duration exposure in EGBs unchanged (+0.22 years). This level remains broadly in line with the average observed since the beginning of ‘25 (+0.19 years)”.
- “Single-currency European real money investors also kept their long duration exposure in EGBs unchanged (+0.28 years). This level remains broadly in line with the average observed since early ‘25 (+0.29 years)”.
- “Investors reduced their overweight exposure in the periphery (from 26% to 20% net long). This level is now broadly in line with the average observed since the beginning of ‘25 (18% net long)”.
- “European multi-currency investors kept their exposure in USD unchanged (+0.05 years)”.
- “Single-currency investors in GBP reduced their long duration exposure (from +0.33 to +0.25 years). This level is below the average observed since the beginning of ‘24 (+0.35 years)”.
- Note that all the deviations provided above are against the respective benchmarks.
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ESM ISSUANCE: E2bln WNG Long 3-year: Final Terms
- EU2b WNG Long 3Y Fixed (Nov. 17, 2028) at MS+12 (guidance was MS+15 area). MNI had expected a transaction today with a E1-3bln size.
- Books above EU15b (excluding JLM interest): Leads
- Coupon: Annual, act/act, short first
- Settlement: June 17, 2025
- ISIN: EU000A1Z99X3
- Bookrunners: HSBC, MS (B&D), UniCredit
Details as per Bloomberg and MNI colour.
GERMAN AUCTION PREVIEW: 2.40% Apr-30 Bobl
This morning, Germany will hold its seventh regular (non-green) Bobl auction of the year. On offer will be E4.0bln of the 2.40% Apr-30 Bobl (ISIN: DE000BU25042).
- The size is below the E4.5bln seen at the last auction of this issue in May, but it is not untypical that auction sizes are reduced after a couple openings in German auctions, particularly given that this will be the last re-open of this line.
- Recent auctions in the German Bobl segment have been on the weak side, with the May 6 auction being technically uncovered (the 0.95x bid-to-issue was the lowest since July 2022) and the bid-to-cover was the lowest since October 2022 at 1.23x. This is an extension of deteriorating demand metrics which have been in place since May.
- However, the secondary-market mid-price has been below the low price achieved throughout the Bobl auctions this year, and there have been no noticeable adverse market reactions to the weak auction performance recently. Also, in other maturities, primary demand for German government bonds appears to have stabilized recently.
- Supply is in focus generally this morning, with syndications from the UK and from the ESM, as well as auctions from the Netherlands and Finland.
- The next German auction will be next tomorrow's E3.0bln of the 10-year 2.50% Feb-35 Bund, while a new Oct-30 Bobl will be launched on July 8.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
EQUITIES: Some Light Selling In Equities
No overt driver for the latest downtick in European equity benchmarks. It came a little after e-mini S&P futures registered a fresh session low. Markets remain skittish ahead of day 2 of the Sino-U.S. Trade talks in London, with limited macro headline drivers apparent since the UK labour market data.
