EGBS: Little Impact From Regional Data; Equities and Crude Apply Pressure
May-30 09:36
- Bund futures have traded in a modest 37 tick range, currently -12 at 131.08, just off session lows of 131.02. Somewhat weaker-than-expected country-level flash inflation data has not shifted sentiment materially, with confidence in the Eurozone inflation outlook already baked into market prices.
- Instead, firmer equity and crude oil prices appear to have applied pressure to EGBs. First support in Bunds lies at 130.39, the May 29 low.
- We’ve seen some early roll activity in futures this morning, ahead of next week’s June 6 expiry.
- German yields are 1.5-2.5bps higher on the session.
- 10-year EGB spreads to Bunds are up to 0.5bps tighter. Institutional books for the 7-year BTP Italia are open, and will close at 1100BST.
- Despite the ECB being in its pre-meeting quiet period, Bank of Italy Governor Panetta still commented on the need for a pragmatic and flexible approach on rates.
- Spanish May flash HICP was slightly below consensus at 1.9% Y/Y, the same annual rate as Italy which was in line with forecasts. MNI estimates that there may be some slight downside risks to the German national CPI consensus of 2.1% Y/Y and 0.1% M/M, following state-level data this morning.
- Eurozone lending growth to the private sector accelerated a touch further in April, setting fresh highs since mid-2023. Italian GDP confirmed flash estimates at 0.3% Q/Q.
- Global focus turns to the US April PCE report at 1330BST.
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GERMAN AUCTION RESULTS: 2.60% May-41 Bund / 2.50% Jul-44 Bund
Apr-30 09:35
| 2.60% May-41 Bund | 2.50% Jul-44 Bund | |
| ISIN | DE000BU2F009 | DE0001135481 |
| Total sold | E1.5bln | E500mln |
| Allotted | E1.143bln | E452mln |
| Previous | E1.135bln | E392mln |
| Avg yield | 2.80% | 2.83% |
| Previous | 3.08% | 2.74% |
| Bid-to-offer | 2.04x | 2.21x |
| Previous | 1.67x | 3.10x |
| Bid-to-cover | 2.68x | 2.44x |
| Previous | 2.21x | 3.95x |
| Avg Price | 97.47 | 95.23 |
| Low Price | 97.47 | 95.20 |
| Pre-auction mid | 97.452 | 95.171 |
| Prev avg price | 93.97 | 96.47 |
| Prev low price | 93.96 | 96.45 |
| Prev mid-price | 93.944 | 96.445 |
| Previous date | 26-Mar-25 | 22-Jan-25 |
FOREX: USD/JPY Struggles on Approach to Recovery High Ahead of GDP
Apr-30 09:26
- JPY is weaker against all others early Wednesday, however USD/JPY is yet to make any meaningful test on the Friday recovery high at 144.03. With tariff limbo still in place, and no trade negotiations to speak of between the US and China, G10 currencies are awaiting the next macro cue or headline to trade with any real conviction. That said, EUR/GBP continues its losing streak, with the cross hitting a new lower low of 0.8482 in overnight trade.
- Moves follow the cross trading through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323.
- Meanwhile, Australian CPI for Q1 came in toward the upper-end of expectations, helping AUD/USD recover well into the European morning. Spot faltered on the approach toward yesterday's 0.6450 highs, however, meaning the pair has traded either side of the 0.64 handle for eight consecutive sessions. The 200-dma defines the first topside level, at 0.6460.
- US data picks up Wednesday, with MNI Chicago PMI for April seen moderating further to 45.9 from 47.6 previously. Advance GDP, Personal income, spending and the latest PCE stats for March are also due. Central bank speak sees BoE's Lombardelli, ECB's Villeroy & Makhlouf as well as the BoC minutes. The Fed remain inside their pre-decision media blackout period.
GILT AUCTION RESULTS: Decent 4.375% Mar-28 auction
Apr-30 09:13
Decent 4.375% Mar-28 auction: 3.48x bid-to-cover ratio for the GBP4.5bln issued. That’s the highest bid-to-cover for this Gilt since the November 2024 launch. The auction size was also larger than the previous issues (which ranged between GBP4-4.25bln).
- The 0.2bp tail was the joint tightest on record for this line, alongside the January re-opening (0.4bp tail in March, 0.5bp in Feb).
- Lowest accepted price of 101.438 above the 101.4305 pre-auction mid-price. The secondary market price has moved up to 101.467 following the publication of the results.
