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EGBS: Bund Futures Weighed By Crude Oil, GBP Short-End Sell-off

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

Bund futures are -32 ticks lower at 133.60, pressured by a near-2% rise in Brent crude futures. 

  • Weakness in GBP STIRs also weighed on EGBs earlier this morning, but Gilt/SONIA futures have since stabilised.
  • German factory orders were skewed lower by large-scale orders (printing much weaker than expected at -5.8% M/M vs -2.0% cons), but the underlying trend remains weak.
  • Meanwhile, Eurozone August retail trade was also weaker than consensus on an annual basis at 0.8% Y/Y (vs 1.0% cons).
  • The German cash curve has bear flattened, owing to the earlier sell-off in the GBP short-end. 2s10s now sits below zero following Friday’s US-data driven flattening.
  • The 10-year OAT/Bund spread is 1.5bps tighter at 76bps. Details of the French 2025 budget will be presented on Thursday (Oct 9).
  • The spread is seemingly converging back towards ~75bps after last week’s fiscal tightening announcements, after hovering close to ~80bps before any concrete measures were put forward.
  • 10-year peripheral spreads to Bunds are biased a little wider, with European equities weakening. 
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Bund futures are -32 ticks lower at 133.60, pressured by a near-2% rise in Brent crude futures. 

  • Weakness in GBP STIRs also weighed on EGBs earlier this morning, but Gilt/SONIA futures have since stabilised.
  • German factory orders were skewed lower by large-scale orders (printing much weaker than expected at -5.8% M/M vs -2.0% cons), but the underlying trend remains weak.
  • Meanwhile, Eurozone August retail trade was also weaker than consensus on an annual basis at 0.8% Y/Y (vs 1.0% cons).
  • The German cash curve has bear flattened, owing to the earlier sell-off in the GBP short-end. 2s10s now sits below zero following Friday’s US-data driven flattening.
  • The 10-year OAT/Bund spread is 1.5bps tighter at 76bps. Details of the French 2025 budget will be presented on Thursday (Oct 9).
  • The spread is seemingly converging back towards ~75bps after last week’s fiscal tightening announcements, after hovering close to ~80bps before any concrete measures were put forward.
  • 10-year peripheral spreads to Bunds are biased a little wider, with European equities weakening.