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BTP: Redemption/Coupons Payments Help Counter Heavy Supply Burden

BTP
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The 10-year BTP/Bund spread has tightened ~1bp this morning, despite heavy 5/10-year BTP supply due at 1000BST/1100CET. However, sizeable BTP redemption/coupon payments (~E24.5bln) are available for reinvestment as of today, which should be reducing some pre-auction pressure and help facilitate the absorption of the supply itself.

  • BTP futures are +38 ticks at 119.42, and the medium-term technical trend condition remains bullish. Firm support lies at 118.37, the 50-day EMA, while key resistance and the bull trigger has been defined at 120.06, the Aug 22 high.                           
  • An extension higher of European equity futures has also supported broader peripheral spread tightening, while the softer-than-expected tracking of German state-level CPI data prompted a near uniform rally in EGBs (thus had little impact on spreads).
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The 10-year BTP/Bund spread has tightened ~1bp this morning, despite heavy 5/10-year BTP supply due at 1000BST/1100CET. However, sizeable BTP redemption/coupon payments (~E24.5bln) are available for reinvestment as of today, which should be reducing some pre-auction pressure and help facilitate the absorption of the supply itself.

  • BTP futures are +38 ticks at 119.42, and the medium-term technical trend condition remains bullish. Firm support lies at 118.37, the 50-day EMA, while key resistance and the bull trigger has been defined at 120.06, the Aug 22 high.                           
  • An extension higher of European equity futures has also supported broader peripheral spread tightening, while the softer-than-expected tracking of German state-level CPI data prompted a near uniform rally in EGBs (thus had little impact on spreads).