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EGBS: Weaker Ahead Of ECB Decision, Equities and Crude Weigh

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

The net impact of the rally in equities and crude that began yesterday afternoon has continued to weigh on FI this morning. Bund futures are -43 ticks today at 134.93. Initial firm support in Bunds remains some way off at 134.01 (the 20-day EMA), though.

  • Regional focus remains on this afternoon’s ECB decision, where a 25bps cut is unanimously expected. The decision is at 1315BST/1415CET, before the press conference at 1345BST.
  • Our baseline scenario for the guidance looks for President Lagarde to indicate a willingness to cut policy rates further but refuse to be drawn into speculating on the October meeting.
  • The German cash curve has lightly bear flattened, but 2s10s remains just shy of YTD steeps.
  • 10-year peripheral spreads to Bunds are tighter on the back of the equity rally. Today’s 3/7-year BTP supply was digested smoothly. 
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The net impact of the rally in equities and crude that began yesterday afternoon has continued to weigh on FI this morning. Bund futures are -43 ticks today at 134.93. Initial firm support in Bunds remains some way off at 134.01 (the 20-day EMA), though.

  • Regional focus remains on this afternoon’s ECB decision, where a 25bps cut is unanimously expected. The decision is at 1315BST/1415CET, before the press conference at 1345BST.
  • Our baseline scenario for the guidance looks for President Lagarde to indicate a willingness to cut policy rates further but refuse to be drawn into speculating on the October meeting.
  • The German cash curve has lightly bear flattened, but 2s10s remains just shy of YTD steeps.
  • 10-year peripheral spreads to Bunds are tighter on the back of the equity rally. Today’s 3/7-year BTP supply was digested smoothly.