EGBS: Supply Weighing Once Again
Feb-12 10:41
Bund futures are just off session lows, currently -19 ticks at 132.51 (lows of 132.48). The 20-day EMA at 132.63 has been pierced, with 132.34 the next downside target. Sovereign supply has once again weighed on EGBs, with a downtick in oil prices providing only temporary reprieve.
- German yields are 2-3bps higher, with the curve lightly bear flattening.
- The spread has been set for today’s 30-year OAT syndication, while conventional issuance has come from Greece, Germany and Portugal.
- Italian industrial production was much weaker than expected at -3.1% M/M (vs -0.2% cons, 0.3% prior), though it can be a volatile series month-to-month.
- 10-year EGB spreads to Bunds are up to 1.5bps tighter.
- Resident ECB hawk Holzmann unsurprisingly warned against 50bp cuts – but this probably already aligns with the median Governing Council view.
- Broader macro focus remains on the US CPI report at 1330GMT/1430CET.
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EQUITIES: FTSE Block trades
Jan-13 10:41
FTSE Block trades, suggest buyers, multiple clips:
- Z H5 4.16k total at 8218.00.
- Z H5 2.5k total at 8217.00.
GILTS: Recoveries Remain Shallow
Jan-13 10:38
Gilts remain under pressure, with Chancellor Reeves’ weekend comments doing little to promote confidence.
- Futures breach initial support at last week’s low (89.00), basing at 88.96, before a bounce to 89.25 last.
- Yields little changed to 4bp higher, 50s relatively resolute.
- 10s as high as 4.901% this morning vs. last week’s high of 4.921%.
- 30s got near last week’s multi-decade high (5.473%), topping out at 5.469%.
- 10-Year gilt/Bunds little changed on the day, around 225bp.
- BoE-dated OIS shows 46bp of cuts through year-end vs. 49bp late on Friday. Last week’s extremes of ~39bp untested.
- SONIA futures 0.5-5.5 lower, last week’s lows intact.
- GBP750mln of short-dated APF sales from the BoE due this afternoon.
- CPI data (Wednesday) headlines the domestic calendar this week. That reading will be much more consequential for markets than the monthly GDP (Thursday) and retail sales (Friday) data.
- We will provide the usual data preview and review around the CPI release.
- Comments from BoE dovish dissenter Taylor (Wednesday) also eyed.
EURIBOR OPTIONS: Put fly
Jan-13 10:38
ERG5 97.87/97.75/97.62p fly, bought for 0.75 in 2k.
