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EGBS: Bund Futures Off Highs; German Curve Twist Steepens

EGBS
BulletEurozoneFixed Income BulletsMarkets

Bund futures have moved away from session highs but have traded in a tight 30 tick range this morning. Futures are currently -30 ticks at 134.54, with initial support at 134.39 (Dec 13 low). 

  • The current bearish cycle in Bund futures remains in play and the contract continues to trade closer to its recent lows. Sights are on 133.98, a Fibonacci retracement point. Clearance of this level would strengthen the current downleg.
  • ECB’s Chief Economist Lane’s webcast with MNI has concluded. His remarks were generally not market moving.
  • Eurozone November Final HICP was revised down a tenth from the rounded flash reading on an annual basis to 2.2%Y/Y from 2.3%Y/Y - unrounded this was a smaller -0.04 revision to 2.24% Y/Y (vs 2.28% flash, 2.00% prior).
  • The German cash curve has twist steepened, with 2-year yields 1bp lower and 30-year yields 3bps higher. German swap spreads have narrowed month-to-date, with the long end leading the move.
  • The 10-year OAT/Bund spread remains above 80bps. There is still no schedule for PM Francois Bayrou to name the parties that will form his new administration or the individuals that will sit in his Council of Ministers.
  • 10-year peripheral spreads to Bunds are also biased a little wider today.
  • Broader macro focus remains on the FOMC decision later this evening. 
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Bund futures have moved away from session highs but have traded in a tight 30 tick range this morning. Futures are currently -30 ticks at 134.54, with initial support at 134.39 (Dec 13 low). 

  • The current bearish cycle in Bund futures remains in play and the contract continues to trade closer to its recent lows. Sights are on 133.98, a Fibonacci retracement point. Clearance of this level would strengthen the current downleg.
  • ECB’s Chief Economist Lane’s webcast with MNI has concluded. His remarks were generally not market moving.
  • Eurozone November Final HICP was revised down a tenth from the rounded flash reading on an annual basis to 2.2%Y/Y from 2.3%Y/Y - unrounded this was a smaller -0.04 revision to 2.24% Y/Y (vs 2.28% flash, 2.00% prior).
  • The German cash curve has twist steepened, with 2-year yields 1bp lower and 30-year yields 3bps higher. German swap spreads have narrowed month-to-date, with the long end leading the move.
  • The 10-year OAT/Bund spread remains above 80bps. There is still no schedule for PM Francois Bayrou to name the parties that will form his new administration or the individuals that will sit in his Council of Ministers.
  • 10-year peripheral spreads to Bunds are also biased a little wider today.
  • Broader macro focus remains on the FOMC decision later this evening.