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EGBS: Mixed Performance Amid Hawkish ECB Repricing, Idiosyncratic Factors

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

10-year EGB spreads to Bunds are mixed this morning, with Irish bonds outperforming on positive Friday ratings action and DSL spreads widening amid an uptick in political uncertainty.

  • The 10-year IRISH/Bund spread is ~1bp tighter at 29.5bps, aided by S&P’s Positive outlook revision on Friday after hours (rating affirmed at AA). S&P referenced Ireland’s “extraordinary fiscal overperformance” as rationale for the outlook upgrade.
  • Danske Bank “remain positive on Irish government bonds despite the solid performance in 2024 versus peers”, seeing “room for more tightening” to Bunds beyond current levels.
  • Meanwhile, 10-year DSL spreads to Bunds are 2.5bps wider at 22.5bps, even as the Dutch coalition avoided collapse following crisis talks last Friday (see here).
  • 10-year peripheral (ex-Ireland) and OAT spreads to Bunds are biased a little wider, with ECB-dated OIS seeing light hawkish repricing this morning (141bps of easing priced through Dec’25 vs ~145bps at Friday’s close).
  • Eurozone September trade balance data is due at 1000GMT/1100CET, with more focus on today’s ECB Executive Board speakers this afternoon (Lane and Lagarde). 
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10-year EGB spreads to Bunds are mixed this morning, with Irish bonds outperforming on positive Friday ratings action and DSL spreads widening amid an uptick in political uncertainty.

  • The 10-year IRISH/Bund spread is ~1bp tighter at 29.5bps, aided by S&P’s Positive outlook revision on Friday after hours (rating affirmed at AA). S&P referenced Ireland’s “extraordinary fiscal overperformance” as rationale for the outlook upgrade.
  • Danske Bank “remain positive on Irish government bonds despite the solid performance in 2024 versus peers”, seeing “room for more tightening” to Bunds beyond current levels.
  • Meanwhile, 10-year DSL spreads to Bunds are 2.5bps wider at 22.5bps, even as the Dutch coalition avoided collapse following crisis talks last Friday (see here).
  • 10-year peripheral (ex-Ireland) and OAT spreads to Bunds are biased a little wider, with ECB-dated OIS seeing light hawkish repricing this morning (141bps of easing priced through Dec’25 vs ~145bps at Friday’s close).
  • Eurozone September trade balance data is due at 1000GMT/1100CET, with more focus on today’s ECB Executive Board speakers this afternoon (Lane and Lagarde).