LOOK AHEAD: Wednesday Data Calendar: Inventories, Fed Speak, Bank Stress Test
Jun-28 10:13
- US Data/Speaker Calendar (prior, estimate)
- Jun-28 0700 MBA Mortgage Applications (0.5%, --)
- Jun-28 0830 Retail Inventories MoM (0.2%, 0.2%)
- Jun-28 0830 Wholesale Inventories MoM (-0.1%, -0.1%)
- Jun-28 0830 Advance Goods Trade Balance (-$97.1B rev, -$93.7B)
- Jun-28 0930 Fed Chair Powell, ECB Lagarde, BOJ Ueda, BOE Bailey from ECB Central Bank Forum, Sintra Portugal
- Jun-28 1130 US Tsy $22B 2Y FRN Note auction (91282CGY1), and $46B 17W Bill sale
- Jun-28 1300 US Tsy $35B 7Y Note auction (91282CHJ3)
- Jun-28 1630 Federal Reserve Board annual bank stress tests results
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PORTUGAL: 10Y Yields Find Support At 3.15%, Bund Spread Narrowest Since Feb'22
May-29 09:54
- Portuguese 10Y yields have seen a reasonable bounce off lows of 3.153% and are back at 3.175% for still -9bps on the day, more in line with other EGBs.
- The move came after it pushed through last week’s lows after multiple attempts at 3.15-3.16 handles, but with seemingly some support at the 3.150% level.
- It also sees the Portugal-Bunds spread back at Friday’s close of 73bps for lows since Feb 2022, having briefly pushed even lower still.
EGBS: No Let Up In Morning’s Rally as ECB Pricing Drifts Lower
May-29 09:35
- The day’s rally shows no sign of letting up just yet, with Bunds now -7.7bps on the day, still led marginally on the day by OATs -8.0bps for core EU FI, but with Portuguese 10s outperforming with yields currently -10.4bps.
- There is no additional impact in Spanish 10s since headlines of Sanchez calling early general elections for July 23 hit Bloomberg, still lagging the rally but down a sizeable -6.9bps.
- There aren’t any clear headlines to pin the broader rally on but it comes with ECB-dated OIS implied rates softening with the +57.5bp of hikes to October’s (depo-equivalent) 3.82% terminal rate trimmed 3bps on the day. Having swung to fully pricing a hike for the Jun 15 meeting last week, it just about holds it with 24bp priced.
SPAIN: Sanchez Announces Plans to Dissolve Parliament, Call Snap Elections
May-29 09:33
- Bloomberg report that Spanish PM Sanchez is to dissolve parliament and declare snap elections for July 23rd. The call for fresh elections follows heavy losses in both regional and local elections this weekend, at which both the People's Party as well as the far-right Vox party won control of eight of the twelve regions that held votes.
- Sanchez stated in a televised address "I take personal responsbility for the results". The sharp losses for Sanchez's socialist party puts the conservative People's Party in a strong position to regain power this year, in elections that were initially expected to be held in December.
- The results helped prompt some modest outperformance in Spanish assets from the off Monday, but the strong showing faded from the open - putting the IBEX-35 higher by 0.2%, broadly inline with wider European indices.
