GILTS: Opening calls

We flagged BTP tightening as the standout move in EGBs on a couple of occasions on Friday. Some sell-side thoughts on the matter are outlined below:

• Commerzbank note that “10-Year BTP-Bund spreads closed below 175bp for the first time since March, which is also close to the lowest levels seen so far this year. Without domestic news, the tightening was seemingly driven by risk-on, lower inflation and possibly a pause in BTP supply for institutionals (the BTP Valore for retail investors is due this week). We remain cautious with regard to BTPs though ahead of the TLTRO repayment and see better value in wideners at current levels.”
• UniCredit note that “while the move may have been exacerbated by reduced liquidity in the BTP market due to a public holiday in Italy, it nevertheless underpins a positive sentiment for the country, as well as expectations of robust demand from domestic retail investors. Today, Italy will open the sale of the BTP Valore, an instrument reserved for retail investors, which offers an attractive return of almost 3.80% for buy-and-hold investors. Strong demand at this sale, which will take place throughout this week, would bolster sentiment.”

Eurex Roll pace (expiry Wednesday):

• Buxl: 61%.
• Bund: 53%.
• Bobl: 50%.
• Schatz: 58%.
• BTP: 47%.
• BTS: 40% (below pace).
• OAT: 61%.