GILTS: Steepening Extends, Bears Eye Next Support

• Date $MM Issuer (Priced *, Launch #)
• 11/19 $Benchmark Avalon Bay 5Y +95a
• 11/19 $500M VSP Optical WNG 10Y +170
• 11/19 $Benchmark Element Fleet 5Y +125a
• 11/19 $Benchmark SMBC Aviation 10Y +145a
• 11/19 $500M FIBRA Prologis WNG 10Y +170a
• 11/19 $Benchmark EOG Resources +5Y, 30Y tap
• 11/19 $Benchmark Bangkok Bank 5Y +115a, 10Y +130a
• 11/19 $Benchmark Western Alliance Bank 10NC5 +312a
• 11/19 $Benchmark Baxter 3Y +130a, 5Y +155a, 10Y +185a
• 11/19 $Benchmark First Abu Dhabi Bank (FAB) investor calls

 The Atlanta Fed's GDPNow estimate for Q3 is now up to a cycle high 4.23% Q/Q SAAR - up from 4.05% prior. That is the highest estimate yet for Q3 from the Atlanta Fed, and if their model is correct, it would be the strongest since Q3 2023.

• "After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, a decrease in the nowcast of third-quarter real gross private domestic investment growth from 4.9 percent to 4.8 percent was more than offset by an increase in the nowcast of the contribution of net exports to third-quarter real GDP growth from 0.57 percentage points to 0.78 percentage points."
• Indeed inventories and net exports make up 1.11pp of that growth, so final domestic demand is running closer to 3%, but apart from weak structure (both residential and nonresidential) investment, the economy looks to be firing on all cylinders with PCE estimated to grow 3.4% Q/Q SAAR.
• As noted earlier, MNI expects the BEA to be able to provide a Q3 advance GDP estimate by early December.

Recent weakness in core global FI seems largely tied to a bid in equities through the Wall St. cash open. 

• Firmer Atlanta Fed GDPNow also a potential factor.
• Long end gilts hold wider vs. both German & U.S. peers in light of the ongoing speculation surrounding the future of PM Starmer.