SOUTH AFRICA: National Treasury Holds Linkers Sale
Nov-07 07:45
- The Mail & Guardian reported hat the uMkhonto weSizwe (MK) Party's parliamentary caucus called on party leader Jacob Zuma to launch a probe into ZAR70bn allegedly siphoned from the party through 'exorbitant salaries and costs such as accommodation and security.'
- Ex-State Enterprises Minister and ANC MP Malusi Gigaba announced he would hand himself over to the police after being summoned over charges related to Transnet. Gigaba has insisted that he was innocent as allegations related to the Zuma-era Gupta scandal continued to do the rounds.
- South Africa's gross reserves rose to $71.55bn in October from $69.74bn prior. Net reserves rose to $69.36bn from $67.87bn. SARB Governor Lesetja Kganyago said last month that 'if the opportunity avails itself that we can continue to increase our reserves, we would do that,' even as the current level of reserves is 'adequate'.
- The National Treasury is looking to sell 1.875% 2033, 5.125% 2043 and 2.5% 2050 linkers today.
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Historical bullets
OAT: Further Spread Tightening On Latest Headlines
Oct-08 07:43
OAT/Bunds tightens by a further 1bp as outgoing PM Lecornu points to a “shared will to have a budget by the end of the year”.
- This builds on the previously outlined optimism re: increased potential for a deal between Lecornu and the political left, which we detailed in a recent bullet.
BUNDS: Best Volume of the Day goes through in Bund, testing resistance
Oct-08 07:30
- The best volume to the buy side went through in Bund, helping the contract to the initial resistance noted at 128.82.
- Some ~80k lots went through since the EU Cash Equity Open, with the dip in Risk likely supportive after ASML fell some 7% on the Open.
- This 128.82 resistance holds for now as Equity recover from their lows. Above the latter and continuation towards the 129.00 figure in Bund will open to the 129.13 Gap next, this level printed to the tick at the last FOMC Meeting.
EGBS: Early Bid May Reflect French Optimism, But M/T Risks Still Prevalent
Oct-08 07:28
Major EGB futures are operating close to session highs, with OATs (+35 ticks) modestly outperforming Bunds (+28 ticks) and BTPs (+31 ticks). There was an uptick in FI futures volumes around the European cash equity open, but we haven’t seen an obvious headline driver for the early extension higher.
- The bid may reflect optimism around outgoing French PM Lecornu’s last ditch talks with the Socialists this morning. Lecornu will deliver an address at 0830BST/0930CET ahead of these talks.
- Lecornu has expressed a little more willingness to work with the Left overnight/this morning.
- This comes after Education Minister Borne suggested she was open to the suspension of pension reform as a concession to the Socialists “if it is the condition for the stability of the country”.
- An agreement with the Socialists, which would help pave the way towards a 2026 budget agreement, would decrease immediate-term political uncertainty in France.
- However, it may only be a short-term solution. Such a move would face intense opposition from the right, and a suspension of pension reform would keep French public finances on a damaging trajectory.
