EM CEEMEA CREDIT: OETC: book building update

Recent trade in FFX5 saw ~6.8K given at 96.145, with a further 2K trading at that level on the follow, small bid there last.

Bund futures have moved away from previously noted support at 128.04, now +7 ticks at 128.26. Initial resistance is the 20-day EMA at 128.63.

• Bunds have found light support from a pullback in European equity and Brent crude futures this morning. Headline flow has otherwise been light.
• German yields are up to 0.5bps lower across the curve.
• The downtick in equities contributes to a modest widening of 10-year EGB spreads to Bunds (up to +1bp). OATs the marginal underperformer after the once-notch sovereign rating downgrade of France from Morningstar DBRS on Friday. BTPs don’t see much of a lasting tailwind after Italy received the (at least partially expected) one-notch rating upgrade from Fitch
• EGB supply is due from the EU and Belgium this morning. Note that this will be the first auction at which the EU will hold a second non-competitive round (at which a further 20% would be available the following day).
• No key regional data to start the week, with focus on tomorrow’s flash PMIs.
• ECB’s Lane and Nagel are scheduled to speak later. Broader GC commentary since the September decision suggests there is little appetite for another rate cut this cycle, with most officials deeming rates to be appropriate at current levels for now.

Gilt Basis trade, suggest Cash seller:

• G Z5 2.44k at 90.76.