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EGBS: Bunds Erase Yesterday's Gains Amid Renewed German Spending Prospects

EGBS
BulletEurozoneFixed Income BulletsMarkets

Bund futures have erased yesterday’s gains after the German Green party signalled hopes for a defence spending deal by the end of this week. Futures are -73 ticks at 127.10, piercing last Friday’s 127.18 low. Initial firm support and the bear trigger is 126.64 (Mar 6 low), clearance of which would expose 126.49 (2.95% 10-year yield level) and 126.56, a Fibonacci projection.

  • There has been little in the way of regional data this morning, while Bank of Finland Governor Rehn echoed the ECB’s intensely data-dependent approach ahead of the April decision.
  • The German curve has bear steepened, with 2-year yields 1.5bps higher and 10-year yields up 5bps. Germans ASWs (vs 3-month Euribor) have tightened up to 1bp on the session.
  • Books are open for today’s 10-year Dec-35 EU-bond syndication. The E9bln WNG size was within MNI’s E7-10bln range.
  • Renewed German spending prospects has supported European equities, helping 10-year EGB spreads to Bunds tighten. The BTP/Bund spread is 2.5bps tighter today at 110.5bps. Note that Portugal’s minority government is expected to lose a confidence vote today, triggering new elections.
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Bund futures have erased yesterday’s gains after the German Green party signalled hopes for a defence spending deal by the end of this week. Futures are -73 ticks at 127.10, piercing last Friday’s 127.18 low. Initial firm support and the bear trigger is 126.64 (Mar 6 low), clearance of which would expose 126.49 (2.95% 10-year yield level) and 126.56, a Fibonacci projection.

  • There has been little in the way of regional data this morning, while Bank of Finland Governor Rehn echoed the ECB’s intensely data-dependent approach ahead of the April decision.
  • The German curve has bear steepened, with 2-year yields 1.5bps higher and 10-year yields up 5bps. Germans ASWs (vs 3-month Euribor) have tightened up to 1bp on the session.
  • Books are open for today’s 10-year Dec-35 EU-bond syndication. The E9bln WNG size was within MNI’s E7-10bln range.
  • Renewed German spending prospects has supported European equities, helping 10-year EGB spreads to Bunds tighten. The BTP/Bund spread is 2.5bps tighter today at 110.5bps. Note that Portugal’s minority government is expected to lose a confidence vote today, triggering new elections.