SPAIN AUCTION RESULTS: Relatively weak auction
Jul-06 08:52
- The top of the E5.6-6.5bln target range of nominal Oblis was sold (E6.503bln).
- However, bid-to-covers were relatively weak for the 6-year Obli as well as the 50-year Obli and average for the 10-year Obli.
- The stop out price was also below the pre-auction mid-price for the 6/50-year Oblis (as well as the 5-year ObliEi).
- Overall, a relatively weak auction.
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EGBS: Bunds Outperform & Bull Steepen
Jun-06 08:49
EGBs have derived support from the combination of lower crude oil prices (with yesterday’s lows comfortably breached) and the latest ECB consumer inflation expectations survey revealing that “expectations decreased significantly - reversing most of the increases seen in the previous month.”
- Some pointed to comments from ECB hawk Knot, who noted that peak inflation was in the rear-view, although a closer look at his comments revealed continued worry that stickiness in inflation remains evident, with a hat tip to second round effects. Some caution re: potential corporate liquidity issues was also flagged, while Knot reaffirmed the idea that delayed impulses from already enacted tightening are still in the pipeline.
- Bunds run 2.5-5.5bp richer across the curve with bull steepening in play, while futures traded through yesterday’s high before moving away from best levels.
- Bunds outperform at the 10-Year point, with semi core spreads little changed to a touch wider, while peripherals are 0.5-2.0bp wider as BTPs underperform once again (~3bp or so of Friday’s tightening has been given back on net).
- Eurozone retail sales and ECB speak from Centeno provides the regional highlights during the remainder of the session after a soft round of German industrial orders crossed early on.
EQUITIES: Looking ahead to expiry
Jun-06 08:46
- Expect continued action in Options ahead of Expiry on the 16th June.
- Massive OI in Equities, with 264bn worth of Notional just in SX5E.
- Bank stocks also saw the biggest ever trade when the 117.5c was bought in 375k back in November.
Largest OI in SX5E:
- 3800c (104k) / 3800p (191k).
- 3850c (25.5k) / 3850p (110k).
- 3900c (46.2k) / 3900p (171k).
- 4000c (62.6k) / 4000p (174.8k).
- 4100c (122k) / 4100p (213.6k).
- 4200c (134k) / 4200p (198.2k).
- 4300c (109k) / 4300p (131.6k).
- 4375c (129.7k) / 4400c (106.8k).
- 4500c (178.5k)
Bank stocks SX7E:
- 100c (89k) / 100p (150k).
- 105c (329.2k) / 105p (108.8k).
- 110c (260k) / 110p (73.7k).
- 112.5c (215.6k) / 112.5p (161k).
- 115c (256.8k).
- 117.5c (411.3k).
CROSS ASSET: NBP in Focus Ahead of Busy Week for EM Data
Jun-06 08:45
- AUD sits comfortably at the top of the G10 FX pile following the RBA’s somewhat unexpected 25bps rate hike and accompanying hawkish policy statement. NZD sits firmer also as AUD strength spills over. EUR/USD pared overnight gains and now trades marginally in the red after the latest ECB survey showed that Eurozone consumer inflation expectations for the next 12 months fell to 4.1% in April from 5.0% in March.
- Though EUR/USD trades softer, ING analysts note that a stronger EUR will likely support CEE FX today, with CZK in particular seen outperforming having already demonstrated the highest beta against EUR/USD within the region in recent weeks. USD/TRY continues to post fresh highs, with the pair targeting the 22.00 handle next.
- The NBP rate decision is the key risk event in EM today (Exp: Unchanged) with Governor Adam Glapinski holding his usual press conference tomorrow. CPI data for Hungary, Russia, Mexico, Colombia and Chile as well as the CBR and Peru rate decisions take focus later in the week.
- MNI NBP Preview: https://roar-assets-auto.rbl.ms/files/53302/MNI%20...
- There is a thin data calendar in Europe today, with Fedspeak from Cleveland Fed President Mester crossing further out.
