EGBS: Small Pullback Off Latest Highs, Italy Outperformance An Anomaly
Mar-21 13:36
- EGBs have seen a little dip off latest session highs although continue to hold reasonable gains as equities remain under pressure either side of the Atlantic (VGA -1.0%, ESA -1.0%).
- Crude oil futures have modestly pared earlier declines (Brent -0.3%) but nat gas prices have fully reversed sharp increases seen with the open (TTF 1st unchanged after a ~6% intraday correction lower).
- RXM5 has seen session highs of 128.62 (currently 128.54, +.36) for close to Wednesday’s high of 128.66. Resistance is eyed at 128.87 (20-day EMA) after which lies a key short-term level at 129.41 (Jan 14 low).
- The German cash curve trades bull steeper, with the 2Y -3.5bp and 10Y -2.7bp.
- Semi-core track close to Germany in 10Y space with peripherals underperforming as would be expected against the risk-off backdrop (GGB-Bund spreads +1.9bp on the day, Portugal +1.1bp)
- BTPs are an anomaly though (-3.4bps), currently outperforming all other EGBs with Bund spreads tightening 0.5bps to 112bps for back more firmly within the week’s range of 109-114bps.
- Of next week’s redemption profile, the heavy E37.7bn for a former 5Y OAT maturing on Tuesday could be providing some broader FI support but it’s hard to square away BTP outperformance considering the E14.6bn of BTP Short Term doesn’t mature until next Friday.
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US: MNI POLITICAL RISK - Senate Takes The Lead On Trump's Agenda
Feb-19 13:35
Download Full Report Here
- Senate Majority Leader John Thune (R-SD) opened floor action on a budget resolution to underpin a USD$300 billion reconciliation bill, escalating a showdown with the House over President Donald Trump's agenda. The move signals the Senate is sceptical Speaker Mike Johnson (R-LA) can corral his conference behind a single 'megabill' that includes deep spending cuts and a debt ceiling hike.
- President Trump added another layer of complexity to the House reconciliation plan, telling Fox News’ Sean Hannity that Medicaid will be ringfenced from cuts, leaving few options for achieving spending cuts required to fund Trump's tax agenda.
- President Trump issued a fresh tariff threat yesterday, telling reporters that he is likely to impose a 25% tariff on automobile, semiconductor, and pharmaceutical imports as soon as April 2, when an interagency trade review is completed.
- Trump signed an executive order that would give him more authority over agencies that operate with some independence from the White House.
- The Trump administration upended years of US policy towards Russia, pledging to restore lines of communication with Moscow and appearing to endorse several key Kremlin talking points over the war in Ukraine.
- Trump’s hardline position on Ukraine, although telegraphed on the presidential election campaign trail, may be a difficult sell to Senate Republicans – many of whom have spent years advocating for Ukraine funds and bolstering NATO.
- Poll of the Day: 70% of voters believe tariffs will raise prices.
Full article: US DAILY BRIEF
BONDS: Italian Futures are keeping EGBs under pressure
Feb-19 13:34
- The Italian BTP is helping EGBs take another leg lower, there's also likely been some interest in fading the BTP/Bund spread ahead of the 100bps level Yesterday and into Today.
- Looking at the outright future, some will look for next support below the figure at 118.65 (24th Jan low).
- In Yield terms, that 24th January high of 3.682%, equates to 118.72 Today.
MNI: US JAN HOUSING STARTS 1.366M; PERMITS 1.483M
Feb-19 13:30
- MNI: US JAN HOUSING STARTS 1.366M; PERMITS 1.483M
- US DEC STARTS REVISED TO 1.515M; PERMITS 1.482M
- US JAN HOUSING COMPLETIONS 1.651M; DEC 1.534M (REV)
