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EGBS: Bunds Pierce Friday’s Low As Sovereign and Corp Supply Weighs

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

Bund futures have pierced Friday’s low as this morning’s selloff in core FI extends, currently -58 ticks at 133.61.

  • First support in Bund futures is 133.30 (Oct 15 low), shielding the key support and bear trigger at 132.75 (Oct 10 low).
  • Today’s sovereign/IG supply has weighed on EGBs, with an uptick in crude oil/natural gas futures also applying pressure at the margin.
  • Sovereign supply has included an Italian exchange and SlovGB auction, while EU-bond and Belgian OLO results are due at 1030BST and 1100BST respectively.
  • ECB-dated OIS price a 30% implied probability of a 50bp cut in December, though Bank of Lithuania Governor Simkus said he does not see the need for cuts larger than 25bps at this stage.
  • The German cash curve has bear steepened, helping 2s10s extend multi-year steeps at 9.5bps.
  • 10-year peripheral spreads to Bunds are little changed, with BTPs and OATs seeing limited reaction to Friday’s ratings action (see our earlier post for more colour).
  • The remainder of today’s global macro calendar is light, with focus on scheduled and ad-hoc central bank speak as the IMF/World Bank annual meetings begin.
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Bund futures have pierced Friday’s low as this morning’s selloff in core FI extends, currently -58 ticks at 133.61.

  • First support in Bund futures is 133.30 (Oct 15 low), shielding the key support and bear trigger at 132.75 (Oct 10 low).
  • Today’s sovereign/IG supply has weighed on EGBs, with an uptick in crude oil/natural gas futures also applying pressure at the margin.
  • Sovereign supply has included an Italian exchange and SlovGB auction, while EU-bond and Belgian OLO results are due at 1030BST and 1100BST respectively.
  • ECB-dated OIS price a 30% implied probability of a 50bp cut in December, though Bank of Lithuania Governor Simkus said he does not see the need for cuts larger than 25bps at this stage.
  • The German cash curve has bear steepened, helping 2s10s extend multi-year steeps at 9.5bps.
  • 10-year peripheral spreads to Bunds are little changed, with BTPs and OATs seeing limited reaction to Friday’s ratings action (see our earlier post for more colour).
  • The remainder of today’s global macro calendar is light, with focus on scheduled and ad-hoc central bank speak as the IMF/World Bank annual meetings begin.