NORGES: RATES PROBABLY AT CURRENT LEVEL QUITE SOME TIME

RATES MAY NEED TO BE ON HOLD LONGER THAN ENVISIONED: NORGES

MNI: NORGES BANK LEAVES RATES UNCHANGED AT 4.50%

MNI WATCH: CNB Seen Cutting 50Bps to 5.25%, Signal Slower Pace

MNI China Daily Summary: Tuesday, April 30

MNI BRIEF: China To Keep Tackling Risks In Real Estate, Debts

MNI: BAKER HUGHES US RIG COUNT 605; OIL RIGS 499; GAS RIGS 102

BoE Data Watch

RBA Data Watch

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

© 1982-2023 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Citi Like OAT/Bund Tightener Vs. SPGB/Bund Widener

EGBS
HomepageBond Market NewsBulletMarketsFixed Income Bullets

Citi suggest that “a concession is perhaps built into OAT-Bund spreads, looking around 6bp too wide on a simple 1-year regression with BTP and Bono spread to Bunds, ahead of Friday’s French sovereign rating reviews by Moody’s and Fitch.”

  • They see “this as the key rating event for OATs, as a S&P downgrade on 31 May is likely somewhat priced.”
  • “Anything short of a rating downgrade this week is likely to drive some relief rally in OATs, which might then be followed by sharply declining net supply in May.”
  • “This contrasts with increasing risks for Bonos, which have benefitted from fiscal concerns around Italy and France and are now heading into a period of political uncertainty, with Spanish PM Sanchez suggesting he might quit (which looks unlikely to us) and the Catalan election coming up on 12 May.”
  • “We recommend 10-Yeat OAT-Bund tighteners, weighted on 1-year beta vs Bono-Bund wideners.”
150 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

Citi suggest that “a concession is perhaps built into OAT-Bund spreads, looking around 6bp too wide on a simple 1-year regression with BTP and Bono spread to Bunds, ahead of Friday’s French sovereign rating reviews by Moody’s and Fitch.”

  • They see “this as the key rating event for OATs, as a S&P downgrade on 31 May is likely somewhat priced.”
  • “Anything short of a rating downgrade this week is likely to drive some relief rally in OATs, which might then be followed by sharply declining net supply in May.”
  • “This contrasts with increasing risks for Bonos, which have benefitted from fiscal concerns around Italy and France and are now heading into a period of political uncertainty, with Spanish PM Sanchez suggesting he might quit (which looks unlikely to us) and the Catalan election coming up on 12 May.”
  • “We recommend 10-Yeat OAT-Bund tighteners, weighted on 1-year beta vs Bono-Bund wideners.”