BONDS: Off Highs, But Most Of Tariff-Driven Rally Sticks
Apr-03 09:37
A move off session lows in European equities and the lack of willingness to challenge 2.60% in Bund yields sees EGBs back from best levels.
- Bund futures traded as high as 129.94 before fading back to 129.71 last.
- Marks higher in the final round of services PMI readings will have provided some modest background pressure as well.
- Still, EGBs hold onto the bulk of the rally triggered by the imposition of U.S. tariffs.
- German yields 3-11bp lower on the day, curve bull steepens.
- EGB spreads to Bunds little changed to 2.5bp wider, with GGBs & BTPs seeing the most notable rounds of underperformance. Note that the major spreads that we monitor remain within their respective multi-week ranges.
- ECB pricing is 4-10bp more dovish across ’25 meetings, ~70bp of cuts showing through the December decision.
- Gilt futures traded as high as 93.14 but have faded back to 92.70 last.
- Yields 3-8bp lower, curve bull steepens.
- 5s30s threatens the first close above 100bp since ’21, last ~105bp.
- UK 10s are ~1bp wider to Bunds, probably owing to the harsher U.S. trade levies imposed on the EU vs. the UK.
- Soft reception of the latest 15-Year gilt auction also factors into that move.
- BoE-dated OIS 2-8bp more dovish across ’25 meetings, showing ~61bp of cuts through year-end.
- Expect continued reaction to the U.S. tariffs to drive markets for much of the remainder of the session. U.S. ISM and weekly jobless claims headline the global data calendar.
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EGB SYNDICATION: DDA 10-year 2.50% Jul-35 DSL: Book update
Mar-04 09:35
- Spread guidance revised to +25.0 to +26.5bps vs the 2.50% Feb-35 Bund (ISIN: DE000BU2Z049).
- (Initial spread guidance was +25.0 to +28.0bps).
- Books in excess of E26bln
- ISIN: NL0015002F72
US-RUSSIA: Sanctions Must Be Lifted To Normalise US-Russia Relations - Kremlin
Mar-04 09:31
Reuters carrying comments from Kremlin spokesperson Dmitri Peskov, speaking on major developments in the war in Ukraine, including possible sanctions relief and US President Donald Trump's decision to pause military aid to Ukraine.
- Peskov said it’s “too early to comment” on reports that the Trump administration is looking at possible sanctions relief for Russia but notes that sanctions are “illegal” and need to be lifted in order to normalise relations.
- Reuters reported overnight that the White House, “has asked the State and Treasury departments to draft a list of sanctions that could be eased for U.S. officials to discuss with Russian representatives in the coming days as part of the administration's broad talks with Moscow on improving diplomatic and economic relations.”
- The report adds: “The sanctions offices are now drawing up a proposal for lifting sanctions on select entities and individuals, including some Russian oligarchs…” The report also notes that sanctions on Russia’s oil sector could be eased to allow more punitive measures against Iran’s oil exports.
- Peksov: “Seems as if European countries will try to compensate Ukraine for the apparent loss of US military aid… We need to see how the situation develops on the ground… It is obvious that the US was the main supplier of this war.”
- Peskov: “If the United States stops these supplies, it will be the best contribution to the cause of peace… If the reports are true then this could encourage the Kyiv regime to seek peace.”
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Mar-04 09:26
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