EQUITIES: Updated Roll Pace

• EUR Benchmark 5Y Fixed (May 21, 2030) MS+70a (+/-5) will price in range (we think there is a good chance of a large E1.0-1.5bln transaction size)
  • Guidance MS+80 area
  • Books above EU2.8b (including JLM interest): Leads
  • Coupon: Annual, act/act ICMA
• Format: Reg S CAT1, registered, senior unsecured
• Settlement: May 21, 2025
• ISIN: XS3075496896
• Bookrunners: BNPP (B&D), GS, JPM
• Timing: May price today

Details as per Bloomberg

Bank of America note that “Q4 saw a material deterioration in the U.S. International Investment Position (IIP), taking it to -90%/GDP. Meanwhile the Eurozone pushed further into surplus, while the UK's IIP shortfall was mostly revised away. This leaves TIPS looking expensive versus both on this metric”. 

• They highlight at the same time “the IMF's measure of global imbalances has been revised larger - requiring overseas investors to commit ever greater sums to the U.S. at a time when many are purportedly trying to "de-dollarize" (i.e., do the opposite)”.
• Bank of America believe that “the vulnerable region of the Treasury market is the long-end, both on a spread and a curve basis. We would now pay long-dated forward real yield in TIPS to receive the equivalent in UK rates, picking up yield”.
• They also recommend receiving 5y5y "real €str", as the “5y5y real rate is sufficiently far forward to represent "neutral" and is somewhat higher than we believe is fair for a Eurozone r*. But it also represents almost the peak of the forward real rate map, with attractive roll-down”.

• In the equity space, a bullish trend condition in S&P E-Minis remains intact and this week’s appreciation reinforces bullish conditions. The contract has cleared an important resistance at 5837.25, the Mar 25 high and a bull trigger. This strengthens the bullish theme, paving the way for a continuation near-term. Sights are on the 6000.00 handle next. Initial firm support to watch lies at 5648.28, the 50-day EMA.
• A bullish theme in the EUROSTOXX 50 futures contract remains intact. Gains on Monday reinforce current bullish conditions. The contract is extending the recent breach of 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg. The continuation higher signals scope for a climb towards 5516.00, the Mar 3 high and the key bull trigger. Initial firm support to watch lies at 5152.85, the 50-day EMA. Clearance of this level would signal a possible reversal.