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EGBS: October Flash PMIs Underscore Growth Concerns, Bunds Stronger

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

The October flash PMIs underscored existing Eurozone growth concerns, leaving Bund futures +46 ticks today at 133.17.

  • A bear threat remains present in Bunds though, with key resistance still some way off at 134.25 (Oct 16/18 highs).
  • Although the German PMIs were stronger than consensus, the underlying details of the report were still weak, keeping focus on tomorrow’s IFO survey.
  • The French PMI was weaker than expected, while the rest of the Eurozone once again outperformed the region’s two largest economies.
  • ECB-dated OIS price a 40% implied probability of a 50bp cut in December, but reached a dovish extreme of just over 50% after the French data.
  • The German cash curve has moved away from intraday (and fresh ytd) highs of 24bps, now little changed today at 20bps.
  • 10-year peripheral spreads to Bunds are a little tighter, with European equity futures up 0.75%.
  • Focus once again turns to ECB-speak, with Kazaks and Lane scheduled to speak today. 
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The October flash PMIs underscored existing Eurozone growth concerns, leaving Bund futures +46 ticks today at 133.17.

  • A bear threat remains present in Bunds though, with key resistance still some way off at 134.25 (Oct 16/18 highs).
  • Although the German PMIs were stronger than consensus, the underlying details of the report were still weak, keeping focus on tomorrow’s IFO survey.
  • The French PMI was weaker than expected, while the rest of the Eurozone once again outperformed the region’s two largest economies.
  • ECB-dated OIS price a 40% implied probability of a 50bp cut in December, but reached a dovish extreme of just over 50% after the French data.
  • The German cash curve has moved away from intraday (and fresh ytd) highs of 24bps, now little changed today at 20bps.
  • 10-year peripheral spreads to Bunds are a little tighter, with European equity futures up 0.75%.
  • Focus once again turns to ECB-speak, with Kazaks and Lane scheduled to speak today.