EM CEEMEA CREDIT: MIZRAHI-TEFAHOT BANK $BMK 10.25NC5.25 TIER 2

Recent flow in the U.S. short end included:

• FFG6/J6 paper paid -8.0 on ~4.3K
• SFRH6/U6 paper paid -32.0 up to -31.5 on ~4.2K

Latest block trade lodged at 08:39:36 NY/03:39:36 London:

• FVH6 4.2K lots blocked at 108-31.75, looks like a seller.
• WNH6 1.0K lots blocked at 118-09, looks like a buyer.
• Points to FV/WN flattener, DV01 ~$185K.
• Cash 5s30s curve trades to fresh session lows at ~104bp on the follow, registering the lowest level seen since November 20.

Gilts off early lows after yesterday’s low in futures holds, but a bid in European equities limits the recovery.

• A reminder that spillover from the hawkish repricing in the EUR short end drove much of the recent sell off.
• Gilt futures trade as low as 90.63 before recovering to ~90.70 last.
• Support clustered at 90.62/53, while resistance comes in at 91.16.
• A break of the support cluster would deepen the recent bearish move and negate a bullish technical theme.
• Yields 0.5-1.5bp higher vs. closing levels, curve a touch flatter.
• Gilt bulls still can’t force a sub-165bp close in the gilt/Bund spread, although the differential continues to hover around recently registered ’25 lows, last 166.5bp.
• GBP short end pricing little changed vs. pre-gilt open levels.
• The previously detailed BoE TSC hearing headlines the UK calendar today (14:15 London).
• On the supply front, the DMO will sell GBP750mln of the 4.25% Jun-32 gilt via a tender operation this morning.