STIR: SFI/ER Z5 Spread Through 200bps; Muted Price Action In EUR STIRs Today
May-20 15:49
The SFI/ER Z5 spread has pierced the 200bps handle, now up 3bps today at 201bps. Resistance in the spread is not seen till 213.5bps, the Jan 14 high. SONIA underperformance has driven movements in the spread today (see our earlier post for more colour), with Euribor price action more muted despite some decent options activity.
- ECB-dated OIS continue to essentially fully price a 25bp cut through June, with 53bps of cuts priced through year-end. Thursday’s May flash PMIs presents the next key regional data release to watch.
- ECB’s Wunsch re-iterated that the Eurozone may need “mildly supportive” rates to help re-anchor inflation at 2%, with the US-tariff induced confidence shock likely to lead to weaker price pressures than previously anticipated.
- Wunsch noted that such a stance would be achieved with two more 25bp cuts to 1.75% - in line with market expectations.
- Eurozone flash May consumer confidence was a little stronger-than-expected at -15.2 (vs -16.0 cons, - 16.6 prior). The survey collection date was May 1 - May 19, so fully incorporated the latest easing of US tariff tensions (e.g. agreements with the UK and China). Country and sub-component level data is not available in the flash release, with more information filtering through in national-based surveys over the coming days.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jun-25 | 1.937 | -23.4 |
| Jul-25 | 1.868 | -30.3 |
| Sep-25 | 1.751 | -42.0 |
| Oct-25 | 1.703 | -46.8 |
| Dec-25 | 1.643 | -52.9 |
| Feb-26 | 1.628 | -54.3 |
| Mar-26 | 1.617 | -55.4 |
| Apr-26 | 1.631 | -54.0 |
| Source: MNI/Bloomberg. | ||
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CARNEY ELECTION PLATFORM HAS CAD225B OF DEFICITS OVER FOUR YRS
Apr-19 13:51
- CARNEY ELECTION PLATFORM HAS CAD225B OF DEFICITS OVER FOUR YRS
- CARNEY SEES 2025-26 BUDGET DEFICIT OF CAD62.3B OR 2% OF GDP
- CARNEY PLANS TO REACH 2% NATO TARGET BEFORE 2030
- CARNEY SEES NEW CAD10B ANNUAL PLAN FOR GREEN TRANSITION BONDS
LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-18 05:18
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
Apr-18 05:16
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
