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BONDS: Bunds Widen Vs. Peers, Gilts Steady Into BoE

BONDS
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The presence of long end supply in France & Spain, coupled with continued German swap spread tightening, has weighed on EGBs this morning.

  • Bund vs. 3-month Euribor ASW has broken below 0bp.
  • While the removal of Lindner as German Finance Minister increases the odds of a debt break tweak, all else equal, our political risk team currently views the odds of a move on this front as slim, given the likely make up of government after elections.
  • Bund futures ~25 ticks off yesterday’s low, last 130.83.
  • German yields 5.0-9.5bp higher, curve steepens. 2s10s to fresh cycle highs.
  • EGBs 0.5-1.0bp tighter vs. Bunds.
  • Gilts more resilient, with futures trading around late Wednesday levels.
  • Bearish technicals intact but contract ~60 ticks off initial support at yesterday’s low, last 93.14.
  • Yields 2-4bp lower, curve steeper. Most benchmark yields hit fresh ’24 highs yesterday.
  • Gilts narrow by ~11bp vs. Bunds after the spread closed at fresh cycle highs yesterday. Last ~204bp.
  • BoE-dated OIS has removed ~30bp of cuts through ’25 since the Budget was delivered.
  • Almost all analysts look for a 25bp cut from the BoE today, with markets pricing ~23bp of easing.
  • Risk of larger-than-expected increase in inflation forecasts post-Budget.
  • Full BoE preview here: https://media.marketnews.com/MNI_Bo_E_Preview_Nov24_8a0a2508cb.pdf
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The presence of long end supply in France & Spain, coupled with continued German swap spread tightening, has weighed on EGBs this morning.

  • Bund vs. 3-month Euribor ASW has broken below 0bp.
  • While the removal of Lindner as German Finance Minister increases the odds of a debt break tweak, all else equal, our political risk team currently views the odds of a move on this front as slim, given the likely make up of government after elections.
  • Bund futures ~25 ticks off yesterday’s low, last 130.83.
  • German yields 5.0-9.5bp higher, curve steepens. 2s10s to fresh cycle highs.
  • EGBs 0.5-1.0bp tighter vs. Bunds.
  • Gilts more resilient, with futures trading around late Wednesday levels.
  • Bearish technicals intact but contract ~60 ticks off initial support at yesterday’s low, last 93.14.
  • Yields 2-4bp lower, curve steeper. Most benchmark yields hit fresh ’24 highs yesterday.
  • Gilts narrow by ~11bp vs. Bunds after the spread closed at fresh cycle highs yesterday. Last ~204bp.
  • BoE-dated OIS has removed ~30bp of cuts through ’25 since the Budget was delivered.
  • Almost all analysts look for a 25bp cut from the BoE today, with markets pricing ~23bp of easing.
  • Risk of larger-than-expected increase in inflation forecasts post-Budget.
  • Full BoE preview here: https://media.marketnews.com/MNI_Bo_E_Preview_Nov24_8a0a2508cb.pdf