November 20, 2023 07:19 GMT
Bunds Under Light Pressure to Start The Week, Watch BTPs & PGBs Post-Ratings Updates
A further uptick in crude oil futures and U.S. Deputy National Security Advisor Finer suggesting that there has been a move closer re: a final agreement on Hamas-held Israeli hostages weighed on core global FI markets overnight.
- Bunds last -24, just off the base of a contained 22 tick session range.
- Slightly softer than expected German M/M PPI data provided some (brief and modest) cushion.
- Technically, Bund futures maintain a firmer short-term tone following last week’s gains and short-term pullbacks are considered corrective. Initial support and resistance come in at the November 15 low (130.36) and November 17 high (131.74)
- After-market Friday rating highlights included Moody’s moving Italy to a stable outlook footing (from negative), remaining one-notch above sub-IG status. Moody’s flagged “a stabilisation of prospects for the country's economic strength, the health of its banking sector and the government's debt dynamics" alongside the decision.
- Also note that Portugal received a two-notch upgrade at Moody’s, to A3, with a stable outlook.
- Sell-side names generally look for cross-market outperformance in PGBs and relief support in BTPs as a result.
- There isn’t much left of note on the regional European docket throughout today, which will leave participants on headline watch. Note that spill over from gilts could be seen in the wake of weekend headline flow/speculation re: UK fiscal matters.
- On the issuance front, Slovakia will come to market with ’27, ’32, ’33 and ’35 paper on Monday.