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BONDS: Sharp Sell-off Amid Light Regional Calendar

BONDS
BulletMarketsFixed Income Bullets

After trading in a tight overnight range, major EGB futures have fallen sharply, with Bund futures now -49 at 132.53. Next support is seen around 132.39, corresponding to the September high in the 10-year yield.

  • There hasn’t been a clear headline driver for the selloff, but we note a pickup in volumes since the European cash equity open.
  • Impending German Bobl supply could also being weighing ahead of the 1030GMT/1130CET bidding deadline.
  • Meanwhile, German swap spreads have tightened to fresh multi-year lows, extending last week’s compression.
  • Gilt futures have been dragged lower by EGBs since the open, currently -29 at 95.58.
  • That leaves the 10-year Gilt/Bund spread 2bps tighter at 194.5bps.
  • GBP4bln of the 4.125% Jul-29 Gilt will be issued today at 1000GMT/1100CET.
  • Today’s UK/Eurozone calendar has been light, with focus on tomorrow’s UK budget, flash Q3 Eurozone GDP and the start of the October flash inflation round. 
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After trading in a tight overnight range, major EGB futures have fallen sharply, with Bund futures now -49 at 132.53. Next support is seen around 132.39, corresponding to the September high in the 10-year yield.

  • There hasn’t been a clear headline driver for the selloff, but we note a pickup in volumes since the European cash equity open.
  • Impending German Bobl supply could also being weighing ahead of the 1030GMT/1130CET bidding deadline.
  • Meanwhile, German swap spreads have tightened to fresh multi-year lows, extending last week’s compression.
  • Gilt futures have been dragged lower by EGBs since the open, currently -29 at 95.58.
  • That leaves the 10-year Gilt/Bund spread 2bps tighter at 194.5bps.
  • GBP4bln of the 4.125% Jul-29 Gilt will be issued today at 1000GMT/1100CET.
  • Today’s UK/Eurozone calendar has been light, with focus on tomorrow’s UK budget, flash Q3 Eurozone GDP and the start of the October flash inflation round.