GBP: Sell-side Sees Few Gamechangers in BoE Decision, EUR/GBP Risk is Higher
Jun-19 13:13
- HSBC note that today's signal for a slow pace of easing reduces the impact on GBP, meaning BoE policy is more relevant for EUR/GBP rather than GBP/USD. While the ECB recently signalled the end to its policy easing, another cut is not ruled out, but the BoE has greater capacity to cut rates, given policy remains in restrictive territory. EUR/GBP is likely to trend higher if evidence for BoE rate cuts builds.
- ING retain a S/T EUR/GBP target at 0.8600, but note a non-negligible possibility of soft UK data triggering faster cut pricing and prompting a break above 0.8700.
- TD Securities see little in the decision for GBP to chew on besides the dovish vote, but central banks are still playing second fiddle to geomacro developments. They see the tone turning a bit more supportive for the USD, reflecting positioning, non-committal Fed and the rise in vol.
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SWAPS: German ASWs Flat To a Little Wider, Long End Leads The Bid
May-20 13:11
German ASWs vs. 3-month Euribor are flat to +0.8bp on the day, with outperformance noted in the long end despite the bear steepening seen on the outright bond curve.
- ASWs tick further away from the multi-week lows registered in early May, with bears unable to force a retest of cycle/all-time lows as of yet.
- It could be that the combination of the recent sell off in spreads has found a bit of a limit, with little in the way of fresh catalysts to promote further cheapening vs. swaps, allowing ASWs to move away from pullback lows in recent sessions.
- The medium-term fundamental outlook still screens bearish for long end spreads, but ongoing macro uncertainty means that volatility should persist.
PIPELINE: Corporate Bond Roundup: Siemens 7Pt on Tap
May-20 13:11
- Date $MM Issuer (Priced *, Launch #)
- 07/20 $Benchmark Siemens 3Y +65a, 3Y SOFR, 5Y +80a, 7Y +90a, 10Y +100a, 30Y +115a, 40Y +125a
- 07/20 $1.5B Rentenbank 5Y SOFR+42
- 07/20 $Benchmark NatWest 4NC3 SOFR+135a, 6NC5 +135a
- 07/20 $Benchmark McKesson 5Y +85a, 7Y +95a, 10Y +105a
- 07/20 $Benchmark Snam 5Y +135a, 10Y +160a, 30Y +185a
- 07/20 $Benchmark Texas Instruments 5Y +65a, 10Y +85a
- 07/20 $Benchmark Kommunalbanken +5Y SOFR+53
- 07/20 $Benchmark Pricoa 5Y +95a, 10Y +115a
- 07/20 $Benchmark Kenvue Inc 7Y +90a
- 07/20 $Benchmark ADB 5Y SOFR+45
- 07/20 $Benchmark OKB 3Y
- $8.6B Priced Monday
STIR: Effective Fed Funds Rate
May-20 13:07
- FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $116B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $299B
- Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.29% (-0.01), volume: $2.570T
- Broad General Collateral Rate (BGCR): 4.28% (-0.01), volume: $1.059T
- Tri-Party General Collateral Rate (TCR): 4.28% (-0.01), volume: $1.018T
- (rate, volume levels reflect prior session)
