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EGBS: French Political Developments In Focus Ahead Of PM Adress

EGBS
BulletEurozoneFixed Income BulletsMarkets

French political developments ahead of PM Bayrou’s general policy address at 1400GMT/1500CET have dominated EGB-specific news flow this morning. Although Socialist leader Faure suggested an agreement with his party and the ruling government was possible this morning, the PM has since pushed back on changes to Macron’s pension reform law.

  • That helps the 10-year OAT/Bund spread widen back above ~83bps, up from an intraday low of 82bps earlier. The spread remains 1bp tighter today though.
  • Bund futures have moved further away from session highs, now -14 ticks at 130.68. Alongside the aforementioned French developments, a bid in European equities and supply-related pressure has weighed on major EGB futures.
  • 10-year peripheral spreads to Bunds have tightened on the equity rally. The BTP/ Bund spread is 2bps tighter at 118.5bps, down from yesterday’s intraday high of almost 124bps. Italian November industrial production was stronger-than-expected at 0.3% M/M (vs 0.1% cons), but the underlying trend remains weak.
  • The spread has been set for today’s 10-year GGB and 3/30-year EU-bond syndications. The EU syndication will have a joint size of E11bln, in line with MNI’s expectations. E5bln of the new 2.40% Apr-30 Bobl was also issued this morning.
  • ECB’s Holzmann continued to express a preference for a cautious easing cycle, given persistent core inflation pressures.
  • The US calendar is headlined by PPI at 1330GMT.
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French political developments ahead of PM Bayrou’s general policy address at 1400GMT/1500CET have dominated EGB-specific news flow this morning. Although Socialist leader Faure suggested an agreement with his party and the ruling government was possible this morning, the PM has since pushed back on changes to Macron’s pension reform law.

  • That helps the 10-year OAT/Bund spread widen back above ~83bps, up from an intraday low of 82bps earlier. The spread remains 1bp tighter today though.
  • Bund futures have moved further away from session highs, now -14 ticks at 130.68. Alongside the aforementioned French developments, a bid in European equities and supply-related pressure has weighed on major EGB futures.
  • 10-year peripheral spreads to Bunds have tightened on the equity rally. The BTP/ Bund spread is 2bps tighter at 118.5bps, down from yesterday’s intraday high of almost 124bps. Italian November industrial production was stronger-than-expected at 0.3% M/M (vs 0.1% cons), but the underlying trend remains weak.
  • The spread has been set for today’s 10-year GGB and 3/30-year EU-bond syndications. The EU syndication will have a joint size of E11bln, in line with MNI’s expectations. E5bln of the new 2.40% Apr-30 Bobl was also issued this morning.
  • ECB’s Holzmann continued to express a preference for a cautious easing cycle, given persistent core inflation pressures.
  • The US calendar is headlined by PPI at 1330GMT.