EGBS: UST Spillover and Heavy Issuance Weighs On Major EGB Futures
May-19 09:23
Spillover from US Treasuries and a heavy morning of corporate/sovereign supply has weighed on major EGB futures, with Bunds down 61 ticks at 129.81. Key support remains at 129.13, the May 15 low.
- Reaction to Moody’s US sovereign rating downgrade late Friday has set the tone across global markets. with USD FX and rates under notable pressure.
- In Europe, today’s new 7-year E3bln WNG EFSF syndication comes alongside auctions from Slovakia and the EU (1030BST), as well as several corporate deals.
- The German 5s30s curve is up 2bps on the sesion to ~90bps, seeing a more modest intraday steepening than UST counterparts (+4.2bps to 89bps).
- 10-year EGB spreads to Bunds have generally widened, with the US downgrade dampening global equity sentiment. The BTP/Bund spread has widened 1.5bps to 102bps, after hovering around the psychological 100bp handle through last week.
- Rounded Eurozone HICP headline / core inflation was unrevised in the final April release at 2.2% Y/Y and 2.7% Y/ respectively. Services inflation was upwardly revised by 5 hundredths to 3.98% Y/Y (highest since August 2024), bringing the rounded rate to 4.0%.
- The European Commission has significantly downgraded its Euro Area's growth and inflation outlook due to the weaker global trade environment as well as the continuing uncertainty surrounding US tariff policy.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-18 05:18
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
Apr-18 05:16
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
CHINA: Bond Futures Marginally Up Despite Liquidity Injection.
Apr-18 04:02
- China’s bond market reacted very little to a second day of sizeable liquidity injection.
- China’s 10YR bond future is up just +0.03 at 109.04 and remains firmly above all major moving averages. The nearest being the 20-day EMA at 108.61.
- The 2YR bond future is down -0.02 at 102.46; remaining below all major moving averages – the nearest being the 20 day EMA at 102.52.
- The 10YR CGB is marginally lower in yield at 1.64%
