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Busy Monday For EUR IG Supply Limits Recoveries From Lows

BONDS
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While core global FI markets have stabilised, little in the way of relief rallies seen.

  • TY, Bund & gilt futures have all traded through Friday’s lows.
  • A brisk start to the week for IG supply, particularly EUR denominated, builds on expectations for a busy start to September for issuance.
  • Dealers polled by BBG currently expect ~$125bn of USD IG supply this month, with the potential for more.
  • They expect a particularly heavy run of issuance between Tuesday and Thursday of this week, given the post-Labor Day norms and window ahead of NFPs.
  • Elsewhere, oil and equity markets hold away from session lows, also limiting rallies in bonds.
  • German yields 1-4bp higher, bear steepening.
  • EGB spreads to Bunds are tighter on the day, peripherals aided by the recovery from lows in equities.
  • Gilt yields see similar moves to German peers, with spreads to Bunds little changed.
  • EGB roll activity continues to artificially boost futures volumes.
  • U.S. Labor Day holiday keeps cash Tsys/repo closed, curtails futures & options trading hours and hampers broader market liquidity.
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While core global FI markets have stabilised, little in the way of relief rallies seen.

  • TY, Bund & gilt futures have all traded through Friday’s lows.
  • A brisk start to the week for IG supply, particularly EUR denominated, builds on expectations for a busy start to September for issuance.
  • Dealers polled by BBG currently expect ~$125bn of USD IG supply this month, with the potential for more.
  • They expect a particularly heavy run of issuance between Tuesday and Thursday of this week, given the post-Labor Day norms and window ahead of NFPs.
  • Elsewhere, oil and equity markets hold away from session lows, also limiting rallies in bonds.
  • German yields 1-4bp higher, bear steepening.
  • EGB spreads to Bunds are tighter on the day, peripherals aided by the recovery from lows in equities.
  • Gilt yields see similar moves to German peers, with spreads to Bunds little changed.
  • EGB roll activity continues to artificially boost futures volumes.
  • U.S. Labor Day holiday keeps cash Tsys/repo closed, curtails futures & options trading hours and hampers broader market liquidity.