RATINGS: Updates On Portugal & Greece Eyed After Close
May-16 08:24
Potential sovereign credit rating reviews of note scheduled for after hours on Friday include:
- Fitch on Greece (current rating: BBB-; Outlook Stable), Luxembourg (current rating: AAA; Outlook Stable) & Slovakia (current rating: A-; Outlook Stable)
- Moody’s on Malta (current rating: A2; Outlook Stable) & Portugal (current rating: A3; Outlook Stable)
- S&P on Cyprus (current rating: A-; Outlook Stable) & South Africa (current rating: BB-; Outlook Positive)
- Morningstar DBRS on the United Kingdom (current rating: AA, Stable Trend)
- Scope Ratings on Portugal (current rating: A; Outlook Stable) & Slovenia (current rating: A; Outlook Stable)
- Most of the focus is likely to fall on the Greek and Portuguese updates from Fitch & Moody’s, respectively.
- We previously outlined the potential for positive action from Moody’s on Portugal in our political risk team’s election preview (vote due this weekend), click for that document.
- Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025.
- Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.
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CROSS ASSET: More upside momentum in Gold
Apr-16 08:13
- Some upside momentum in Gold, more likely short cover, than margin related move, spiked to $3307.47, and next Gold MNI Tech resistance is still at $3347.7 - 1.382 proj of the Dec 19 - Feb 24 - Feb 28 swing.
- US Tnotes at session high is helping the Yen, although USDJPY is finding some demand just ahead of the 142.00 level for now.
MNI: ITALY MAR FINAL HICP +2.1% Y/Y (FLASH 2.1%)
Apr-16 08:05
- MNI: ITALY MAR FINAL HICP +2.1% Y/Y (FLASH 2.1%)
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SWAPS: Front End Of ASW Curve Outperforms Again During Risk-Off Trade
Apr-16 07:57
German ASWs vs. 3-month Euribor trade 0.9-2.0bp wider, with the front end of the spread curve outperforming and the long end lagging.
- The broader risk-off move helps explain the direction of travel for spreads, while the presence of this morning’s 30-Year supply explains some of the underperformance further out the curve (at least intraday).
- Schatz & Bobl spreads vs. 3-month Euribor are 3-4bp off last week’s year-to-date closing highs, while the Bund ASW is essentially equal with last week’ closing high and the Buxl spread is through last week’s closing high, set for the highest close since mid-February.
- Looking at the recent moves, Commerzbank note that “our key specialness metric cheapened below zero for the first time since 2015 and CTDs as well as on-the-runs also trade calm. Thus, the return of the collateral risk premium explains the entire richening of swap spreads, which is also visible in the aggressive steepening of the Bund ASW-structure”.
- They go onto highlight that “Bunds are emerging as the main beneficiary, while UST vs. swap underperformance puts question marks behind their status as safe haven assets. This dynamic is also giving Buxl spreads a lift close to pre-election levels”.
- Looking forwards, they suggest that “for long-dated Bund spreads to decouple from USTs and Gilts on a sustained basis we need to see evidence that the euro could rival the dollar as the world's reserve currency. However, we stick with our base case, where major swap curves look set to converge as risk sentiment stabilises and German fiscal risks take centre stage again by next year”.
