BONDS: Heavy Supply Slate Weighs Ahead Of Key Risk Events

The earlier pressure on core global FI markets has stabilised but there has been little in the way of relief rallies with a heavy corporate issuance slate ahead. U.S. Labor Day holiday keeps cash Tsys/repo closed, curtails futures & options trading hours and hampers broader market liquidity.

• A brisk start to the week for IG supply, particularly EUR denominated, builds on expectations for a busy start to September for issuance.
• Dealers polled by BBG expect ~$125bn of USD IG supply this month, with the potential for more.
• They expect a particularly heavy run of issuance between Tuesday and Thursday of this week, given the post-Labor Day norms and window ahead of NFPs.
• Elsewhere, oil and equity markets hold away from session lows, also limiting intraday rallies in bonds (the ESU4 high of 5667.00 came close to resistance at 5669.00, Aug 26 high).
• TY, Bund & gilt futures have all traded through Friday's lows.
• TY, on unsurprisingly tiny holiday volumes, stands at 113-15 off a low of 113-12 as it holds above support at 113-00 (Aug 8 low).
• Bund futures hold declines of more than 60 ticks and currently at 133.28 are below the 50-day EMA with support seen at 133.00.
• German cash yields closed 2.6-3.7bps higher, bear steepening with 10s leading the increase.
• The OAT/Bund spread of 70bps was the tightest in more than a month.