GERMANY: Merz: It Is Wrong For US To Ease Sanctions On Russian Oil
Speaking from Andøya, Norway, German Chancellor Friedrich Merz says that his gov't learned earlier this morning about the US decision to ease sanctions to allow other countries to purchase Russian oil already at sea. US Treasury Secretary Scott Bessent claimed that the relaxation was aimed at promoting "stability in global energy markets". He said the "short-term measure" would "not provide significant financial benefit to the Russian government". Merz says he would like to know the motivations of the US gov't regarding the waiver, and that "We believe it is wrong to ease sanctions [on Russia] now, for whatever reason."
- Merz: "Unfortunately, Russia continues to show no willingness to negotiate. We will therefore, and must, continue to increase the pressure on Moscow. We will not be deterred or distracted from [supporting Ukraine] by the Iran nuclear deal." In the initial aftermath of the US/Israeli strikes on Iran, Merz was viewed as delivering some of the most, if not positive, then at least measured comments from an EU leader, saying Germany would not 'lecture' the US regarding the attacks. In recent days, this tone has shifted somewhat.
- Speaking in Prague on 10 March, Merz said, “With each day of war, more questions arise. What concerns us most is that there is clearly no common plan for bringing this war to a swift and convincing conclusion. We have no interest in an endless war”. Today, Merz added that "Germany is not part of the Iran war, [and] has no intention to become one".
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PORTUGAL AUCTION RESULTS: OT Results
| 1.95% Jun-29 OT | 3.25% Jun-36 OT | |
| ISIN | PTOTEXOE0024 | PTOTEDOE0010 |
| Amount | E708mln | E673mln |
| Previous | E453mln | E4bln |
| Avg yield | 2.178% | 3.142% |
| Previous | 2.656% | 3.254% |
| Bid-to-cover | 2.28x | 2.02x |
| Previous | 1.53x | |
| Avg Price | 99.27 | 100.95 |
| Pre-auction mid | 99.204 | 100.842 |
| Prev avg price | 96.53 | 99.98 |
| Prev mid-price | 96.587 | |
| Previous date | 14-Feb-24 | 08-Jan-26 |
GERMAN AUCTION RESULTS: 2.50% Aug-54 Bund / 2.90% Aug-56 Bund
| 2.50% Aug-54 Bund | 2.90% Aug-56 Bund | |
| ISIN | DE000BU2D004 | DE000BU2D012 |
| Total sold | E1bln | E1.5bln |
| Allotted | E749mln | E1.16bln |
| Previous | E1.15bln | E786mln |
| Avg yield | 3.47% | 3.47% |
| Previous | 3.28% | 3.49% |
| Bid-to-offer | 1.16x | 1.26x |
| Previous | 0.79x | 1.90x |
| Bid-to-cover | 1.54x | 1.63x |
| Previous | 1.03x | 2.41x |
| Avg Price | 82.67 | 89.26 |
| Low Price | 82.63 | 89.25 |
| Pre-auction mid | 82.619 | 89.194 |
| Prev avg price | 85.61 | 88.95 |
| Prev low price | 85.55 | 88.89 |
| Prev mid-price | 85.560 | 88.875 |
| Previous date | 20-Aug-25 | 21-Jan-26 |
GILTS: Firmer As Equities Soften, Politics Still Dominates Headlines
Downticks in equities support gilts through early London trade, with solid demand at the GBP300mln 4.25% Dec-49 gilt tender also noted.
- Futures +7 at 90.95, respecting yesterday’s high (91.00).
- Bears remain in technical control after piercing key support earlier in the week. Initial support at this week’s low (89.76), while initial resistance is located at the 20-day EMA (91.07).
- Yields ~1.5bp lower across most of the curve.
- Short end pricing steady, showing ~45bp of easing through November.
- Political matters remain at the fore after PM Starmer received public ministerial support on Monday, calming speculation surrounding an expedited leadership challenge/confidence vote.
- The latest press speculation, via Guardian source reports, suggests that Health Secretary Streeting could challenge PM Starmer within weeks (after the Gorton & Denton by-election). Most still expect any serious leadership challenge to come after the local elections in May.
- Little of note on the UK economic calendar, with preliminary Q4 GDP data due tomorrow.
- The delayed U.S. NFP release will headline the wider calendar today, with the recent run of soft U.S. jobs data conditioning markets for a softer-than-expected print.
- Outside of the tender, the DMO has noted that it will launch a new green gilt maturing on 7 March 2037 in the week commencing 9 March. We expect a GBP6.5bln transaction size for now.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Mar-26 | 3.557 | -17.0 |
Apr-26 | 3.499 | -22.8 |
Jun-26 | 3.412 | -31.5 |
Jul-26 | 3.349 | -37.8 |
Sep-26 | 3.315 | -41.2 |
Nov-26 | 3.278 | -44.9 |
Dec-26 | 3.286 | -44.2 |
