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BONDS: Off Lows Alongside Early NY Bid For Tsys

BONDS
BulletMarketsFixed Income Bullets

European & UK benchmarks are off session lows with EU supply in the rear-view. Further support provided by fresh demand for Tsys as NY participants joined the session, although bearish technical remain in play.

  • Bunds away from lows after a break below Friday’s range. Support zone at 131.15/00 went untested, contract based as 131.26.
  • Yields across the German curve 3bp higher to 3bp lower, curve twist flattens.
  • German political and fiscal risks, covered earlier, leave Bunds wider vs, most European peers, even after the recovery.
  • Comments from ECB hawk Holzmann due shortly.
  • ~28.5bp of cuts priced for the December meeting.
  • Gilt futures stick within Friday’s range, yields across the curve 0.5bp lower to 2.0bp higher, curve twist steepens.
  • Early gilt tightening vs. Bunds vanishes, 10-Year spread now 1bp wider at 204.5bp. Scarring from the supply risks emanating from last week’s Budget a likely factor in the widening, keeping the spread above 200bp.
  • Oil remains underpinned on the OPEC+ production decision and Middle East escalation risk noted over the weekend.
  • Expect cross-market flows to dominate ahead of the U.S. election.
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European & UK benchmarks are off session lows with EU supply in the rear-view. Further support provided by fresh demand for Tsys as NY participants joined the session, although bearish technical remain in play.

  • Bunds away from lows after a break below Friday’s range. Support zone at 131.15/00 went untested, contract based as 131.26.
  • Yields across the German curve 3bp higher to 3bp lower, curve twist flattens.
  • German political and fiscal risks, covered earlier, leave Bunds wider vs, most European peers, even after the recovery.
  • Comments from ECB hawk Holzmann due shortly.
  • ~28.5bp of cuts priced for the December meeting.
  • Gilt futures stick within Friday’s range, yields across the curve 0.5bp lower to 2.0bp higher, curve twist steepens.
  • Early gilt tightening vs. Bunds vanishes, 10-Year spread now 1bp wider at 204.5bp. Scarring from the supply risks emanating from last week’s Budget a likely factor in the widening, keeping the spread above 200bp.
  • Oil remains underpinned on the OPEC+ production decision and Middle East escalation risk noted over the weekend.
  • Expect cross-market flows to dominate ahead of the U.S. election.