UKRAINE: Kremlin-Next Round Of Ukr-US-Rus Talks 'Could Take Place Soon'

"The REPUBLIC OF FRANCE has mandated BNP PARIBAS, CITI, HSBC, J.P. MORGAN and SOCIETE GENERALE to act as Joint Lead Managers on an upcoming new 20 year OAT benchmark, due 25 May 2046.
The transaction will be launched by syndication in the near future, subject to market conditions."
From market source

• We had flagged the potential for the French syndication this week but we had thought the W/C 26 January was more likely.
• We pencil in an E8-10bln transaction size tomorrow.

UK paper is a little softer after weakness in JGBs provided a cheapening theme in wider core global FI markets through the Asia-London handover. Another heavy day of EUR supply is also noted.

• Futures -11 at 92.42.  Bulls remain in technical control with the contract in the upper end of the recent range after breaking several key resistance levels. Resistance is layered in at 92.62/72/91, while initial support comes in at the Jan 8 base (91.84).
• Yields 0.5-1.5bp higher across the curve, 10s below 4.40%, but the ’25 low (4.363%) remains untested.
• Japanese BoP data for November revealed that Japanese investors generated the largest round of monthly net selling of UK paper since September ‘11. A reminder that the Budget was released at the end of November, with concerns around the UK fiscal situation acting as a potential trigger for the Japanese sales in the run up to that event.
• BoE’s Governor Bailey spoke this morning (09:00 London).
• The text from his appearance will be published on Friday. It seems unlikely there will be anything regarding near-term monetary policy in the speech given the delay between the speech being delivered and the text being released.
• Elsewhere, the latest round of BRC retail sales data pointed to ongoing consumer caution.
• The GBP900mln 1.125% Sep-35 I/L auction generated strong demand (cover of ~4.8x, with very firm pricing).
• SONIA futures flat to -2.0, with SFIZ6 2.5 off yesterday’s cycle high. 44.5bp of BoE easing priced through year-end, with the next cut not quite fully discounted until the end of the June meeting.
• Looking ahead, the impending U.S. CPI release is set to dominate today.

Bund futures have been pressured this morning amid heavy sovereign, SSA and corporate supply, alongside an uptick in crude futures. Now -23 ticks at 127.94, Bunds have fully reversed yesterday’s gains. A short-term bull cycle remains in play for now though, with clustered resistance noted at 128.24 (last week’s high) and 128,29 (50-day EMA).

• The German curve trades bear steeper, with yields 1.5 to 2.5bps higher on the session. The 10-year yield remains within its rough 2.80-2.90% range seen since the start of December.
• French bonds underperform alongside Austrian counterparts, with the 10-year OAT/Bund spread up just over 0.5bps to 67bps. National Assembly debates on the 2026 budget bill resume today, and prospects of finding a compromise appear bleak. 10-year BTP/Bund is 0.5bps narrower.
• Greece and the EU are holding syndications, while conventional EGB auctions have come from the Netherlands, Austria and Germany.
• The regional data calendar has been light, while ECB’s Kocher made unsurprising remarks on monetary policy.
• Global focus remains on the US CPI report this afternoon.  

Figure 1: 10-year Bund Yields (Source: Bloomberg Finance L.P)