Bunds Firm & ASWs Widen A Touch As Deeper ’24 Budget Timeline Questions Circle

As noted elsewhere, a German government spokesperson has flagged that the ruling coalition will try and present the ’24 budget by year-end, although if that doesn’t come to fruition then it plans to agree on a budget in January.

• This continues to draw questions re: ’24 issuance after the well-documented court ruling against the government re: fiscal spending.
• These questions and headwinds outweigh other headlines noting that the Cabinet will seek to agree on the supplemental ‘23 budget this afternoon, before Chancellor Scholz's address to the Bundestag on the issue tomorrow (this would appear to present an expedited schedule compared to initial statements from Finance Minister Lindner, who stated that he would present the supplementary budget to Cabinet on Wednesday 29 Nov).
• The previously covered weakness in crude oil also factors into the bid.
• Bund futures last show +45 or so, just below 130.80, while German cash yields are 3.0-4.5bp lower on the day, with the belly leading the richening.
• Note that futures show through initial intermediate resistance highlighted recently, with a brief look above 130.80.
• ASWs also widen a little on the headlines given questions re: German supply. All of the major ASW spreads are now little changed to a touch wider on the session, with the spreads on the wings of the curve leading the move.