EGBS: Late Short-End Selloff
Jul-27 15:46
Decent bearish move across the short end in Germany and in the Euribor strip ahead of the Europe cash close
- End-2022 ECB implied rates up 10bp to 1.1% in the last 20 min (see chart), with Schatz yields hitting the highest since late Monday.
- Not seeing a particular catalyst and the move largely seems contained to EU rates and not FX or equities. Potentially month-end related.
Source: BBG
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US TSYS/SUPPLY: 2Y Auction Review: Weaker, 0.7 Tail
Jun-27 15:40
Mildly weak 2Y sale, Tsy futures holding near middle of lower session range (curves steeper) after $46B 2Y note auction (91282CEX5) tails: 3.084% high yield vs. 3.077% WI; 2.51x bid-to-cover vs. last moth's 2.61x.
- Indirect take-up: falls to 51.47% vs. 62.55% in May;
- Direct take-up: bounces to 25.28% vs. 22.10% prior
- Primary dealer take-up: 23.24% vs. 15.35% prio;
- The next 10Y auction is tentatively scheduled for July 25.
BRAZIL: Lula Still Leads But Bolsonaro Gaining In Latest Polling
Jun-27 15:34
The latest opinion polling from Brazil shows leftist former President Luis Inacio Lula da Silva retaining a polling lead over incumbent right-winger President Jair Bolsonaro.
- Presidential election first round FSB poll: Lula (PT): 47% (-1), Bolsonaro (PL): 36% (+1), Gomes (PDT): 9% (-1). (+/- vs. 10-12 June 2022) Fieldwork: 24-26 June 2022. Sample size: 2,000
- Brazil (Presidential election), FSB poll: Second round: Lula (PT): 58% (-2), Bolsonaro (PL): 42% (+2). (+/- vs. 10-12 June 2022). Fieldwork: 24-26 June 2022. Sample size: 2,000
- The shrinking but still sizable deficit faced by Bolsonaro in polls is unprecedented, with single-term incumbents usually leading in polls at the three-month mark before elections take place (first round on 2 Oct, second round 30 Oct).
- Political betting markets show Lula as the strong favourite to become the next president, with a 72% implied probability of winning the contest compared to 25.6% for Bolsonaro (see chart below).
Chart 1. Betting Market Implied Probability of Winning 2022 Brazilian Presidential Election, %
Source: Smarkets
EGB OPTIONS: Schatz Put Spread Vs Call
Jun-27 15:26
DUU2 108.50/107.90 put spread vs 109.40 call, bought for 1.5 in 3.25k
