EURJPY TECHS: Trend Needle Points North
Aug-22 06:54
* RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing * RES 3: 175.43 High Jul 11 '2...
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EGBS: Bunds Bear Steepens, Spreads To Bunds Little Changed
Jul-23 06:53
German curve steepens on the bearish FI drivers outlined earlier, yields last 1-4bp higher.
- The bid in equities promotes modest tightening in 10-Year EGB spreads to Bunds, but the major metrics that we monitor are less than 1bp away from yesterday’s closing levels.
STIR: BoE Pricing Little Changed, Just Under 50bp Cuts Through Dec
Jul-23 06:48
FI bearish drivers outlined elsewhere (Japan-U.S. trade deal, weak 40-Year JGB auction & questions surrounding Japanese PM Ishiba’s future) apply very modest hawkish pressure to GBP STIRs.
- BoE-dated OIS little changed to 0.5bp more hawkish through year-end, showing 90% odds of a cut for next month, 26.5bp through September, 42.5bp through November and 49bp through year-end.
- SONIA futures flat to -2.5.
- Little of note on the UK macro calendar today, which will leave cross-market impulses at the fore.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 3.991 | -22.6 |
Sep-25 | 3.952 | -26.5 |
Nov-25 | 3.794 | -42.4 |
Dec-25 | 3.724 | -49.3 |
Feb-26 | 3.606 | -61.1 |
Mar-26 | 3.574 | -64.4 |
GILT AUCTION PREVIEW: 4.375% Jan-40 gilt auction preview
Jul-23 06:43
- The DMO will return to the market today to hold a short 15-year gilt auction of the 4.375% Jan-40 gilt for GBP3.0bln nominal.
- This is a slightly smaller auction size than seen in the three prior auctions (which were all GBP3.25bln). Bid-to-covers have generally been strong ranging from 2.58-2.89x at these auctions with tails ranging from 0.6-1.0bp (1.0bp at the latest auction).
- Given the strength of Monday's long-dated APF sales operation, we would expect today's auction to be digested smoothly.
- RBC write that "we very much like buying the 4r40s [4.375% Jan-40 gilt] on tight and broader RV structures with the bond/sector looking cheap and there being fundamental reasons for both to perform in coming weeks". They "continue to look for curve steepening and hence would only want to buy the 4r40s vs longer maturity gilts on switch". RBC "favour being tactically long UK ASWs here into the seasonal gilt summer supply hiatus (up to end of August) with long 15y ASW quite an attractive expression of this".
- Finally, they note that "the 31st July conventional gilt coupon paying bonds go ex-div today and which will see c.£4.5bn cash proceeds paid to private investors should be particularly supportive of the 15y sector and 4r40s".
