EGBS: Spreads To Bunds Unwind A Little Of Yesterday's Tightening
Jan-23 08:39
10-year EGB spreads to Bunds are up to 1.5bps wider today. Although European equities are a touch softer on the session, the moves likely represent a partial unwind of yesterday’s narrowing, with MT OAT supply also due this morning.
- The 10-year OAT/Bund spread holds just below the 75bps handle. Yesterday evening, Finance Minister Lombard ruled out a capital gains tax increase in the upcoming budget. However, he noted that the Government still intends to apply a levy on the richest individuals to raise revenue this year.
- French political headline flow has been relatively muted this week, with broader market sentiment dictating price action. However, domestic matters may become more important in the weeks ahead, with the Government aiming to present a budget by the end of the month.
- E11.0-13.0bln of MT OAT and E1.5-2.25bln of IL OAT supply is due today. We will send a preview of the nominal auction in due course.
- The BTP/Bund spread is ~1.5bps wider at 108.5bps, with 106bps containing downside yesterday.
- Regional focus remains on tomorrow’s January flash PMIs, which may be consequential for ECB rate cut expectations beyond Q1.
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CROSS ASSET: MONTH END EXTENSION (update)
Dec-24 08:21
This should be a non event for Year End, they are small, and only the lower liquidity could get Govies moving, but unlikely, as investors turn their attention to 2025.
Bloomberg Bonds:
- US Tsys: +0.07yr (small, average).
- EU Govies: +0.04yr (small).
- UK Govies: -0.02yr (non event).
MS Bonds:
- US Tsys: +0.05yr (small).
- EU Govies: +0.03yr (small).
- UK Govies: To contract (non event).
Barclays FX:
- Their Quarter rebalancing model only shows a Weak Dollar Buying signal.
GILTS: Opens within the Calls
Dec-24 08:09
- A slightly higher open for Gilt, was just down 2 ticks at 92.46 vs close, a small wide range of 16 ticks on the Open, but as expected very poor volumes as also seen in the Sonia Strip.
- In Terms of Technical, support is at 91.87, while resistance moves down to 92.92.
GILTS: Opening calls
Dec-24 07:57
Gilt Calls will be taken from Tnotes, with Europe closed, 92.40, would be 8 ticks down.
