SPAIN AUCTION PREVIEW: On offer next week

Mar-01 13:11

Tesoro Publico has announced it is looking to sell the following Bono/Oblis at its auction next Thursday (Mar 7):

  • the on-the-run 5-year 3.50% May-29 Bono (ISIN: ES0000012M51)
  • the 0.50% Oct-31 Obli (ISIN: ES0000012I32)
  • the on-the-run 10-year 3.25% Apr-34 Obli (ISIN: ES0000012M85)
  • Also on offer will be the 2.05% Nov-39 Obli-Ei (ISIN: ES0000012M69).

Historical bullets

GERMAN DATA: National Inflation Data Confirms Services Uptick, Energy Reversal

Jan-31 13:11

German flash January HICP came in slightly below consensus on the yearly rate but in line on the monthly sequential print, at +3.1% Y/Y (vs +3.2% cons; +3.8% prior) and -0.2% M/M (vs -0.2% cons; +0.2% prior).

  • CPI printed slightly below analyst forecasts coming into the session at +2.9% Y/Y (vs +3.0% cons; +3.7 prior), with the NSA monthly rate a touch above expectations, at +0.2% M/M (vs +0.1% cons and prior). Both of those were in line with MNI's estimates following most of the state-level CPI prints this morning.
  • Core CPI (ex-energy/food) came in at +3.4% Y/Y (vs +3.5% prior).
  • As expected, the energy category partly reversed its base-effect induced rise from last month, deflating at -2.8% Y/Y (vs +7.7% prior), regardless of the recent CO2 price increase.
  • However, services inflation ticked up at +3.4% Y/Y (vs +3.2% prior), as suggested by earlier state-level data. This is in part due to the rise in restaurant VAT from January.

US TSYS/SUPPLY: QRA: Another (Final?) Coupon Upsizing, Buyback Announcement

Jan-31 13:06

A quick review of expectations for the upcoming Quarterly Refunding Announcement (0830ET/1330GMT) - our full preview is here (PDF link):

  • Coupon Size Increases: Virtually all analysts whose previews we have seen expect a similar increase across coupon sizes focused on the shorter-end as seen in the November round. Recall that at the November refunding, sizes were upped $3B for 2Y and 5Y, $2B for 3Y and 10Y, $1B for 7Y and 30Y, and no change to 20Y. This would mean a Feb refunding month total of $306B in coupons (up $30B from Nov), and $324B in May. See table below.
  • Low Financing Estimates Mainly Seen Impacting Bills: Treasury's announcement Monday that it projected $760B of net borrowing in the Jan-Mar quarter (a drop of $55B from the previous estimate) followed by $202B for the Apr-Jun quarter represented a downside surprise, on the order of $250-300B for the two quarters compared to the analyst expectations we'd seen. Overall though there was no impact on expectations for coupon upsizings at Wednesday's refunding announcement - though it probably reduced the chances of upside surprises. The main impact is seen on net bill issuance, which is seen as even more firmly negative going forward.
  • Buybacks: Treasury is expected to announce the start of a buyback program which will include cash management repurchases and liquidity management operations (maximum $120B each annually - some details here). There is some debate about when the program will actually begin, however: either in the upcoming quarter, or the quarter starting in May.
  • Guidance: It's widely expected Treasury will stick to its guidance from the November statement and say that it expects this quarter (Feb-Apr) to represent the last increase of coupon sizes.

Source: MNI

CANADA: Monthly GDP Offers First Main Local Data Since BoC Decision

Jan-31 12:57
  • Today see monthly GDP for Nov/Dec advance at 0830ET, landing shortly after US ADP employment and likely overshadowed by the US ECI for Q4 at the same time.
  • Nevertheless, it marks an important domestic update, with analysts sticking with the 0.1% estimate from last month’s advance. If accurate, it would see the first monthly GDP growth since May.
  • Looking to December, alternate advance estimates are mostly stronger on the month but they’re also nominal measures. Retail sales (+0.8%) and wholesale sales (+0.8%) both increased, as did hours worked (+0.4% after -0.7%) but manufacturing sales slipped (-0.6%).
  • As it is, TD look for “another weak” 0.0-0.1% in Dec whilst CIBC note indicators have “been somewhat mixed, albeit leaning towards a further slight increase in activity.”
  • A flat December advance and no revisions would tentatively leave Q4 GDP at just 0.5% annualized on an industry basis. The BoC last week lowered its Q4 GDP forecast from 0.8% to 0.0% (based on the different expenditure approach).
  • With a high bar to further hikes, especially after the BoC's somewhat dovish pivot, risks from a market reaction perspective are likely skewed towards a softer print.