EGBS: Supply Limiting Downside In EGB Yields Today

Downside in German yields has been contained by sovereign and corporate supply, with the latest mandates from Slovakia (20Y) and France (30Y) reinforcing that theme. Intraday, the curve still leans bull flatter, with EGBs taking cues from global peers as opposed to any regional driver. 

• 5s30s is down 0.5bps to 111.5bps, though we assess that medium-term steepening pressures remain intact.
• Bund futures are +4 ticks at 128.35, having traded in a tight 16 tick range so far today.
• 10-year EGB spreads to Bunds are marginally narrower on the session, with the 10-year OAT/Bund spread off lows following the syndication mandate.
• The EU is holding a dual tranche syndication today, with conventional supply coming from the Netherlands, Austria and Germany.
• In data, the French mainland unemployment ticked up 0.2ppt to 7.7% in Q4, against consensus of a stable 7.5% print - this marks the highest level since Q3 2021.
• ECB’s de Guindos re-iterated the Governing Council’s “good place” stance. His comments carry less weight given his term ends in a few months.
• The remainder of today’s calendar includes US retail sales.