RUSSIA: Local Markets Remain Shut Over National Holiday
May-02 07:28
- Local markets remain shut over a national holiday, meaning local newsflow has been light so far this morning. Looking ahead to next week, April PMIs provide the highlight on the domestic data slate.
- Gazprom note that domestic gas flows hit a record for the month of April, with supplies reaching 30.5bcm due to unseasonably cold weather in the southern, north-western regions and around Moscow. The 30.5bcm level is more typical for October, the beginning of the heating season.
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GILTS: Goldman Leave 10-Year Yield Forecast Unchanged
Apr-02 07:28
Goldman Sachs decide to leave their UK yield forecasts unchanged, despite impending tariff risks and downward adjustments elsewhere.
- They expect 10-Year Gilt yields at 4.25% at year-end, reflecting “slightly higher yields versus other G10 markets than prior forecasts implied but still representing a rally from current levels”.
- They “continue to expect 30-Year Gilts to benefit from a more responsive DMO, but with significant issuance in the belly of the curve unlikely to slow any time soon, 10-Year Gilts are likely to remain the weak point on the curve. From a macro perspective, in the absence of clear direction from the domestic data, expect UK yields to track U.S. yields lower”.
GILTS: Looking To Tsys For Cues
Apr-02 07:24
Gilts look to Tsys for cues early today, moving away from lows as the overnight weakness in U.S. paper is unwound.
- Futures back to little changed at 92.10.
- The short-term trend in the contract remains bearish, despite the recent correction.
- Initial support and resistance of note located at 91.59 and 92.42.
- Yields essentially flat across the curve.
- 2-Year yields are ~5bp off March lows, with gilt bulls failing to challenge that key short-term level (4.127%) yesterday.
- GBP STIRs now a little more dovish on the day, reversing modest early hawkish adjustments.
- BoE-dated OIS showing 53bp cuts through year-end vs. 52bp ahead of the gilt open.
- SONIA futures flat to +2.0.
- Little of note when it comes to local news.
- Wednesday’s UK speaker and data schedule is empty.
- The only real point of scheduled domestic interest comes via the GBP1.6bln auction of the 1.125% Sep-35 I/L gilt.
- This will leave focus on U.S. tariff decisions and data for much of the session.
CROSS ASSET: Bund is leading gains in Core Bonds
Apr-02 07:18
- Treasuries are starting to get dragged higher, European Govies lead, as Bund closed its Opening gap earlier.
The Immediate area of interest for Bund is still at 129.54/129.60. - For the US Tnotes (TYH5), while the March high is at 112.01, the March and the 2025 low in the 10yr Yield of 4.1040%, would equate today to 112.03+.
- US Emini is starting to tilt to the downside.
- USDJPY is paring some gains taking its cue from the move in Yields.
