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EGBS: Bund Futures Fade From Russia/Ukraine-Inspired Highs

EGBS
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The rally in core EGBs extended on an escalation of Russia/Ukraine tensions this morning, but futures have since moved away from intraday highs.

  • Bund futures reached a high of 132.99 after RBC-Ukraine reported the first Ukrainian ATACMS strike within Russia (with Russia having approved an updated nuclear doctrine ~45 mins beforehand).
  • However, Bund futures have since fallen back to 132.55, still +61 ticks today.
  • German cash yields are 5.5-7.5bps lower across the curve, while swap spreads have widened. The 10-year BTP/Bund spread has widened 3.5bps to 123bps.
  • The ECB’s Panetta called for the ECB to remove its tightening bias, in line with his dovish stance.
  • Eurozone final headline and core October inflation confirmed flash estimates at 2.0% Y/Y and 2.7% respectively.
  • The EU’s dual tranche syndication looks to be a little smaller than we had expected, with E7bln being tapped across the two lines on offer (MNI had expected E8-9bln).
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The rally in core EGBs extended on an escalation of Russia/Ukraine tensions this morning, but futures have since moved away from intraday highs.

  • Bund futures reached a high of 132.99 after RBC-Ukraine reported the first Ukrainian ATACMS strike within Russia (with Russia having approved an updated nuclear doctrine ~45 mins beforehand).
  • However, Bund futures have since fallen back to 132.55, still +61 ticks today.
  • German cash yields are 5.5-7.5bps lower across the curve, while swap spreads have widened. The 10-year BTP/Bund spread has widened 3.5bps to 123bps.
  • The ECB’s Panetta called for the ECB to remove its tightening bias, in line with his dovish stance.
  • Eurozone final headline and core October inflation confirmed flash estimates at 2.0% Y/Y and 2.7% respectively.
  • The EU’s dual tranche syndication looks to be a little smaller than we had expected, with E7bln being tapped across the two lines on offer (MNI had expected E8-9bln).