PLN: Zloty Extends Gains, Fiscal Situation Remains Under Scrutiny
Oct-02 08:40
EUR/PLN loses altitude for the third consecutive day, last trades -36 pips at 4.2566. Bears eye May 15 low of 4.2230 for initial support, with bulls targeting Apr 16/Dec 25 highs of 4.3102/4.3114. Market participants look to next week's NBP rate decision for local clues on zloty price action.
- Finance Minister Domański reiterated that the government is planning to unveil additional fiscal consolidation measures to prevent the debt-to-GDP ratio from hitting the 55% threshold which would trigger a mandatory implementation of drastic austerity measures.
- NBP Deputy Governor Kightley said that large fiscal deficits reduce the room for interest-rate cuts, but don't necessarily imply the need to tighten monetary policy.
- POLGB yields are marginally higher across the curve, with 3s underperforming. The WIG Index has added 0.6%, with WIG20 last seen 0.4% higher.
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SPAIN T-BILL AUCTION RESULTS: 6/12-month letras results
Sep-02 08:39
| Type | 6-month letras | 12-month letras |
| Maturity | Mar 6, 2026 | Sep 4, 2026 |
| Amount | E1.594bln | E4.174bln |
| Target | E5-6bln | Shared |
| Previous | E1.552bln | E4.033bln |
| Avg yield | 1.958% | 1.986% |
| Previous | 1.932% | 1.945% |
| Bid-to-cover | 2.14x | 1.56x |
| Previous | 2.01x | 1.27x |
| Previous date | Aug 05, 2025 | Aug 05, 2025 |
GILTS: The 4.80% Yield holds
Sep-02 08:34
- The Initial Yield Level in the UK 10yr has held perfectly, this was seen at 4.80%, which equated to 89.80, printed a 89.82 low and a 4.793% high so far on the day.
- As investors price less cut but also demand higher Yields on Borrowing cost, and Growth concerns, the next big Yield level would be seen at 4.921%, this was the 2025 high and the highest printed level since July 2008.
Today, reference 90.03:
- 4.921% = 88.75.
GERMAN AUCTION PREVIEW: 1.90% Sep-27 Schatz
Sep-02 08:32
This morning, Germany will hold a Schatz auction. On offer will be E4.5bln of the 1.90% Sep-27 Schatz.
- The E4.5bln size is in line with recent Schatz re-opens.
- Contrary to other segments of the German curve, Schatz primary demand appears to have been solid recently. The last auction on August 5 saw a 2.51x bid-to-cover (BTC) and a 1.97x bid-to-offer (BTO) - these compare to 1.69-2.92x BTC and 1.29-2.63x BTO ranges seen this year, respectively.
- Domestically, the government's fiscal plans until 2029 should be well digested by markets by now, while the focus turns towards any announcements of "structural reforms" which the coalition plans to float in autumn. The short end of the German curve meanwhile was driven this morning by an interview of hawkish-leaning ECB's Schnabel (Schnabel Interview Contains Unsurprising Hawkish Themes).
- The next German auction will be tomorrow's E5bln of the 2.60% Aug-35 Bund (ISIN: DE000BU2Z056), while the 1.90% Sep-27 Schatz will be next re-opened on 23 September, for E4.5bln.
- Timing: Results will be available shortly after the bidding window closes at 10:30BST / 11:30CET.
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