RATINGS: Stable Outlooks Up For Review Later

• The best volume to the buy side went through in Bund, helping the contract to the initial resistance noted at 128.82.
• Some ~80k lots went through since the EU Cash Equity Open, with the dip in Risk likely supportive after ASML fell some 7% on the Open.
• This 128.82 resistance holds for now as Equity recover from their lows. Above the latter and continuation towards the 129.00 figure in Bund will open to the 129.13 Gap next, this level printed to the tick at the last FOMC Meeting.

Major EGB futures are operating close to session highs, with OATs (+35 ticks) modestly outperforming Bunds (+28 ticks) and BTPs (+31 ticks). There was an uptick in FI futures volumes around the European cash equity open, but we haven’t seen an obvious headline driver for the early extension higher.

• The bid may reflect optimism around outgoing French PM Lecornu’s last ditch talks with the Socialists this morning. Lecornu will deliver an address at 0830BST/0930CET ahead of these talks.
• Lecornu has expressed a little more willingness to work with the Left overnight/this morning.
• This comes after Education Minister Borne suggested she was open to the suspension of pension reform as a concession to the Socialists “if it is the condition for the stability of the country”.
• An agreement with the Socialists, which would help pave the way towards a 2026 budget agreement, would decrease immediate-term political uncertainty in France.
• However, it may only be a short-term solution. Such a move would face intense opposition from the right, and a suspension of pension reform would keep French public finances on a damaging trajectory. 

Major EGB futures are operating close to session highs, with OATs (+35 ticks) modestly outperforming Bunds (+28 ticks) and BTPs (+31 ticks). There was an uptick in FI futures volumes around the European cash equity open, but we haven’t seen an obvious headline driver for the early extension higher.

• The bid may reflect optimism around outgoing French PM Lecornu’s last ditch talks with the Socialists this morning. Lecornu will deliver an address at 0830BST/0930CET ahead of these talks.
• Lecornu has expressed a little more willingness to work with the Left overnight/this morning.
• This comes after Education Minister Borne suggested she was open to the suspension of pension reform as a concession to the Socialists “if it is the condition for the stability of the country”.
• An agreement with the Socialists, which would help pave the way towards a 2026 budget agreement, would decrease immediate-term political uncertainty in France.
• However, it may only be a short-term solution. Such a move would face intense opposition from the right, and a suspension of pension reform would keep French public finances on a damaging trajectory.