MNI BRIEF: China To Support OBOR Via Foreign Exchange Reserves

MNI China Daily Summary: Friday, October 18

RPT-MNI POLICY: Weaker Yen Ups Dec Hike Chances But US Vote A Risk

MNI BRIEF: PBOC To Curb Challenges Of House And Equity Markets

MNI BRIEF: PBOC Launches CNY300bln Stock Buy-back Facility

MNI BRIEF: China To Approve More Securities Funds - NFRA

MNI: EUROZONE AUG CONSTRUCTION OUTPUT +0.1% M/M, -2.5% Y/Y

MNI: UK SEP RETAIL SALES +0.3% M/M, +3.9% Y/Y

MNI: SWEDEN SEP UNEMPLOYMENT 8.2%

CANADA: Politics Week: Trudeau Faces More Pressure To Resign

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

EGBS: Reuters Sources Drives Renewed Dovish Repricing In EUR STIRs and EGBs

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

A dovish Reuters ECB sources piece has helped EUR STIRs and major EGB futures extend the bounce of intraday lows. Bund futures are +22 ticks today at 134.06 (vs a low of 133.67 this morning).

  • Reuters reported that some ECB policymakers wanted to drop guidance that rates would be "sufficiently restrictive for as long as necessary" at the October meeting, though the idea did not gain traction.
  • The subsequent dovish repricing in EUR STIRs has helped EGB curves to bull steepen further, with German 2s10s printing a new YTD high of 8.5bps.
  • ECB-dated OIS price 33bps of cuts through the December meeting (i.e. a ~30% implied probability of a 50bp cut), while the front of the Euribor strip outperforms intraday.
  • This, alongside a bid in European equities and downtick in EUR swaption vol has helped 10-year EGB spreads to Bunds to tighten. BTPs lead, with the BTP/Bund spread now at 118bps (-2.5bps today).
  • Earlier, the distribution of inflation expectations in the ECB’s Survey of Professional Forecasters suggested greater confidence in returning to the 2% target over the next few years.
176 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

A dovish Reuters ECB sources piece has helped EUR STIRs and major EGB futures extend the bounce of intraday lows. Bund futures are +22 ticks today at 134.06 (vs a low of 133.67 this morning).

  • Reuters reported that some ECB policymakers wanted to drop guidance that rates would be "sufficiently restrictive for as long as necessary" at the October meeting, though the idea did not gain traction.
  • The subsequent dovish repricing in EUR STIRs has helped EGB curves to bull steepen further, with German 2s10s printing a new YTD high of 8.5bps.
  • ECB-dated OIS price 33bps of cuts through the December meeting (i.e. a ~30% implied probability of a 50bp cut), while the front of the Euribor strip outperforms intraday.
  • This, alongside a bid in European equities and downtick in EUR swaption vol has helped 10-year EGB spreads to Bunds to tighten. BTPs lead, with the BTP/Bund spread now at 118bps (-2.5bps today).
  • Earlier, the distribution of inflation expectations in the ECB’s Survey of Professional Forecasters suggested greater confidence in returning to the 2% target over the next few years.