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EGBS: OAT/Bund Widens Sharply Into The Close

EGBS
BulletEurozoneFixed Income BulletsMarkets

The 10-year OAT/Bund spread has now widened 5bps today to 86bps - its highest since 2012 according to Bloomberg -  with much of the OAT underperformance starting from ~15:30GMT. There has been a notable pick up in OAT future volumes this afternoon, while Bund future volumes remain below average levels.

  • We haven’t yet found an obvious driver for the widening, but continue to track potential drivers from domestic newswires.
  • Earlier today, the EC approved France’s 2025 draft budgetary plan, as had been reported by Bloomberg last week.
  • The EC did however note that “the risks to achieving the fiscal objectives for 2025 set out in the Draft Budgetary Plan are tilted to the downside, and mainly relate to the favourable macroeconomic assumptions underpinning the budgetary targets set in the Draft Budgetary Plan”.
  • We also note that several sell-side analysts have highlighted the potential for further OAT/Bund spread widening amid ongoing political/fiscal uncertainty in recent days.
  • The 10-year BTP/Bund spread has also widened ~3.5bps this afternoon, now 1.5bps wider today at 128bps. Although European equity futures have moved away from highs, they remain within intraday ranges.
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The 10-year OAT/Bund spread has now widened 5bps today to 86bps - its highest since 2012 according to Bloomberg -  with much of the OAT underperformance starting from ~15:30GMT. There has been a notable pick up in OAT future volumes this afternoon, while Bund future volumes remain below average levels.

  • We haven’t yet found an obvious driver for the widening, but continue to track potential drivers from domestic newswires.
  • Earlier today, the EC approved France’s 2025 draft budgetary plan, as had been reported by Bloomberg last week.
  • The EC did however note that “the risks to achieving the fiscal objectives for 2025 set out in the Draft Budgetary Plan are tilted to the downside, and mainly relate to the favourable macroeconomic assumptions underpinning the budgetary targets set in the Draft Budgetary Plan”.
  • We also note that several sell-side analysts have highlighted the potential for further OAT/Bund spread widening amid ongoing political/fiscal uncertainty in recent days.
  • The 10-year BTP/Bund spread has also widened ~3.5bps this afternoon, now 1.5bps wider today at 128bps. Although European equity futures have moved away from highs, they remain within intraday ranges.