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EGBS: Underperform Gilts Following Bailey Comments, Heavy Supply

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

Bund futures are -34 ticks today at 134.80, underperforming Gilts after dovish commentary from BoE Governor Bailey. Regional headline flow has been light, with heavy French and Spanish supply weighing on EGBs this morning.

  • Although today is a German public holiday, major futures volumes have been in line/slightly above average. Cross-market trading with UK instruments has likely factored in there, given Bailey’s comments.
  • Initial firm support in Bunds lies at 134.59, the 20-day EMA.
  • Today’s LT OAT auction was successful, with the top of the target range sold (E12.0bln) and all four LT OATs seeing a stop price exceed the pre-auction mid-price. Spanish supply was also digested smoothly.
  • An upward revision to the Eurozone September services PMI and slightly higher-than-expected monthly PPI inflation were not major market movers.
  • The German cash curve has bear steepened, with 2s10s now at 7bps.
  • 10-year peripheral spreads to Bunds are biased wider, with Estoxx 50 futures 0.5% lower today.
  • Broader macro focus turns to US jobless claims and ISM services data.
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Bund futures are -34 ticks today at 134.80, underperforming Gilts after dovish commentary from BoE Governor Bailey. Regional headline flow has been light, with heavy French and Spanish supply weighing on EGBs this morning.

  • Although today is a German public holiday, major futures volumes have been in line/slightly above average. Cross-market trading with UK instruments has likely factored in there, given Bailey’s comments.
  • Initial firm support in Bunds lies at 134.59, the 20-day EMA.
  • Today’s LT OAT auction was successful, with the top of the target range sold (E12.0bln) and all four LT OATs seeing a stop price exceed the pre-auction mid-price. Spanish supply was also digested smoothly.
  • An upward revision to the Eurozone September services PMI and slightly higher-than-expected monthly PPI inflation were not major market movers.
  • The German cash curve has bear steepened, with 2s10s now at 7bps.
  • 10-year peripheral spreads to Bunds are biased wider, with Estoxx 50 futures 0.5% lower today.
  • Broader macro focus turns to US jobless claims and ISM services data.