BONDS: Yields Flat To Lower Ahead Of BoE & ECB, German 20s Lag On Syndi Plans

The German 5s30 curve has once again met resistance around 103.7bps, a level which has contained upside on several occasions since mid-September. Although the 2026 German budget (passed last week) contained higher net debt than initial drafts, markets are still awaiting details on how the expected issuance ramp-up will be distributed across the curve. As such, details of DFA’s 2026 issuance plan (usually presented in mid-December) may be necessary before 5s30s can make a fresh challenge of year-to-date highs of 111bps. 

• Renewed interest in long-end swap spread/ASW wideners on Dutch pension fund dynamics may have also played a role (even with spreads a touch off recent highs at typing). The EUR 5s30s swap curve (vs 3m Euribor) is currently at a fresh multi-year high of 70.5bps.
• Intraday, the curve is bull steeper, with 5-year yields down 2.5bps and 30-year yields little changed.
• Bund futures are +17 ticks at 128.82, seemingly finding support from a continued pullback in European equities (though we caveat that these correlations have not been too reliable in recent sessions). Initial resistance in Bunds is seen at the 50-day EMA of 129.10.  
• 10-year EGB spreads to Bunds are up to 1.5bps wider. The OAT/Bund spread is back at 75bps, with political developments still in focus.
• The EU is holding a syndicated tap (E5bln WNG) of the 2.50% Oct-30 EU-bond today.  Meanwhile, Slovakia sold SlovGBs and Finland will sell RFGBs at 1100GMT.
• There is no regional data scheduled today, while the only remaining ECBspeak comes from Bank of Slovenia’s Dolenc. 

Figure 1: German 5s30s Curve

• Ongoing weak risk sentiment underpins low yielding haven currencies JPY and CHF in a session seeing limited volatility so far. Markets await key official economic data reducing uncertainty about the macro picture - clearing up the Fed policy path for the rest of the year.
• CAD outperforms after PM Mark Carney secured passage of the first federal budget of his tenure, suggesting that despite external headwinds, the Canadian political environment will remain relatively stable in the short-to-medium term. Expectations for a further Bank of Canada cut in this cycle let alone December are pretty much eliminated by now, with the short-term outlook for USDCAD appearing bearish form a technical perspective. Firm core indicators in yesterday's CPI report, in conjunction with earlier stronger-than-expected labour market data have combined to pretty much eliminate expectations for a further Bank of Canada cut in this cycle.
• USDCAD is trading inside a bull channel drawn from the Jul 23 low. The top of the channel - currently at 1.4170 - provided a firm resistance on Nov 11. The subsequent move down highlights scope for a bear extension towards the base of the channel at 1.3893. Initial key support to watch is 1.3968, the 50-day EMA.
• USDJPY price action meanwhile confirmed the resumption of an uptrend and extension of recent gains, with sights on 155.53, a Fibonacci projection. Comments following the meeting between Japanese PM Takaichi and BoJ Governor Ueda did not move the needle, with Ueda noting that he told Takaichi that the Bank is operating a process of gradually adjusting its monetary easing, which the PM "seemed to acknowledge". Initial firm support in USDJPY would be 153.49, the 20-day EMA, a clear breach of which would signal scope for a corrective pullback.
• Fed's Barr and Barkin, the ECB's Pereira and Dolenc, as well as the BoE's Pill and Dhingra are scheduled to speak. Barkin is due to comment on the economic outlook having not commented directly on policy since the last Fed decision.
• The US data calendar is starting to pick up, with weekly ADP, November NY Fed services, weekly redbook retail sales, November NAHB housing index, August factory orders, and September TIC flows likely being released today ahead of tomorrow's UK CPI. A roughly inline UK inflation print with a non-inflationary budget may ensure key voter Bailey will support December cut, which could keep the pressure on GBP.