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Fig. 1: BTP Issuance In Focus
- After being stable for most of the day, fixed Bunds began following Treasuries lower around 2:00BST - shortly before the US cash open with curve steepening, equities going bid and some continued optimism surrounding US fiscal stimulus prospects helping risk appetite.
- BTPs have been in focus with the syndicated exchange transaction seeing a new 30-year BTP launched for EUR8bln but with just shy of EUR10bln of buybacks of shorter-dated debt.
- Bund futures are down -0.30 today at 175.41 with 10y Bund yields up 1.1bp at -0.578% and Schatz yields unch at -0.779%.
- BTP futures are down -0.16 today at 148.68 with 10y yields up 0.5bp at 0.786% and 2y yields down -1.4bp at -0.329%.
- OAT futures are down -0.34 today at 169.39 with 10y yields up 1.5bp at -0.297% and 2y yields down -0.5bp at -0.704%.
Gilts have been offered today and the curve has bear steepened.
- Cash yields are now 2-4bp higher on the day and the curve 2bp steeper. Last yields: 2-year -0.0384%, 5-year -0.0322%, 10-year 0.2712%, 30-year 0.8437%.
- The Dec-20 gilt future trades at 135.52, towards the lower end of the day's range (L: 135.45 / H: 135.87).
- Chancellor of the Exchequer Rishi Sunak as announced further job support measures following the fresh surge in coronavirus infections and tightening of social restrictions across the UK.
- The DMO earlier sold GBP2.25bn of the 0.625% Jul-35 Gilt and GBP1.75bn of the 0.625% Oct-50 Gilt. A further GBP382.0mn and GBP236.875mn of the respective issues was taken up through the PAOF.
- Tomorrow will see the release of retail sales for September and preliminary PMI data for October.
- Vol seller: LF1 100.00^ sold at 8.5 in 2k all day
- Bull flattener: 0LM1/LM1 100.12/100.25cs, bought the mid for half in 4.5k
- LH1 99.875/100.00^^, bought for 6 in 10k - potentially short cover as has been sold at 6.5 incl yesterday
- RXZ0 176c, sold at 59.5 in 1.8k * ref 175.54
- Bund downside: RXZ0 174.50/173.00ps vs 178.00c, bought the ps for 15 and 17 in 1.7k calls.
- Bund far OTM downside: RXZ0 166.00p, bought for 1 in 2.6k