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BONDS: Bund and Gilt Futures Under Pressure Again

BONDS
BulletMarketsFixed Income Bullets

Bund and Gilt futures have extended yesterday’s selloff.

  • Bund futures have tested the Oct 10 low and bear trigger at 132.75, clearance of which would expose key support at 132.65 (Sep 2 low).
  • The MNI Policy Team’s latest sources piece reported that ECB officials currently view market pricing for six consecutive cuts as slightly exaggerated barring a change in circumstances.
  • This elicited a light hawkish reaction in EUR STIRs, spilling over into Bunds and the Euro.
  • The German cash curve has bear steepened, with yields flat to 4bps higher. Impending Schatz supply will be limiting any recoveries in the run-up to the 1030BST bidding deadline.
  • 10-year peripheral spreads to Bunds are mixed, with BTP/Bund little changed and SPGBs and PGBs 1bp tighter.
  • Demand at today’s 7/30-year dual tranche Italian syndication appears strong, with combined books in excess of E150bln.
  • Several ECB speakers are scheduled today, including two appearances from President Lagarde at 1500BST/1600CET and 2015BST.
  • Gilts have largely followed Bunds this morning, with futures -46 at 96.76. September public finance data was not a market mover.
  • BoE Governor Bailey’s speech at 1425BST/1525CET headlines today’s UK calendar.
  • We note that increasing odds of a Trump election victory has applied an additional layer of pressure to core FI through October.
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Bund and Gilt futures have extended yesterday’s selloff.

  • Bund futures have tested the Oct 10 low and bear trigger at 132.75, clearance of which would expose key support at 132.65 (Sep 2 low).
  • The MNI Policy Team’s latest sources piece reported that ECB officials currently view market pricing for six consecutive cuts as slightly exaggerated barring a change in circumstances.
  • This elicited a light hawkish reaction in EUR STIRs, spilling over into Bunds and the Euro.
  • The German cash curve has bear steepened, with yields flat to 4bps higher. Impending Schatz supply will be limiting any recoveries in the run-up to the 1030BST bidding deadline.
  • 10-year peripheral spreads to Bunds are mixed, with BTP/Bund little changed and SPGBs and PGBs 1bp tighter.
  • Demand at today’s 7/30-year dual tranche Italian syndication appears strong, with combined books in excess of E150bln.
  • Several ECB speakers are scheduled today, including two appearances from President Lagarde at 1500BST/1600CET and 2015BST.
  • Gilts have largely followed Bunds this morning, with futures -46 at 96.76. September public finance data was not a market mover.
  • BoE Governor Bailey’s speech at 1425BST/1525CET headlines today’s UK calendar.
  • We note that increasing odds of a Trump election victory has applied an additional layer of pressure to core FI through October.