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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.
Fig. 1:
BBG, MNI
EGB SUMMARY: EGBs follow the US election results
The US election continues to dominate sentiment with Biden now priced at around 90% to win in betting markets. Bunds have largely followed Treasuries today, albeit with a lower beta.
- Peripheral spreads which had been a little wider in the morning are now marginally lower as the day draws to a close.
- Bund futures are up 0.39 today at 176.41 with 10y Bund yields down -2.4bp at -0.645% and Schatz yields down -0.4bp at -0.803%.
- BTP futures are up 0.33 today at 150.13 with 10y yields down -3.2bp at 0.701% and 2y yields down -1.2bp at -0.364%.
- OAT futures are up 0.38 today at 170.49 with 10y yields down -2.5bp at -0.370% and 2y yields down -0.3bp at -0.730%.
GILT SUMMARY: US Election Uncertainty & BoE QE Speculation Underpin Bull Flattening
Gilts have rallied and the curve has sharply bull flattened. Uncertainty over the outcome of the US election and the possibility of Donald Trump challenging the result in the Supreme Court has been instrumental, with the potential for additional UK QE further supporting gilts.
- Gilt yields are now 3-7bp lower on the day with the 2s30s spread 4bp narrower. Last yields: 2-year -0.0737%, 5-year -0.072%, 10-year 0.2106%, 30-year 0.7667%.
- The Dec-20 gilt future trades at 136.21, towards the top end of the day's range (L: 135.78 / H: 136.33).
- The DMO earlier sold GBP3.0bn of the 0.125% Jan-26 Gilt.
- Although it looks at the vote counting in the US election will drag on, focus will temporarily shift to the BoE tomorrow. Following on the heels of the ECB's apparent pre-commitment of additional stimulus in December, the BoE is expected to announced a GBP100bn in QE.
DEBT FUTURES/OPTIONS:
- RXZ0 177.50c, bought for 26 in ~1.3k
- RXZ0 175/174ps, bought for 11 in 1k
- RXZ0 173.00p, bought for 3 in 5k
- RXZ0 176/175.50ps 1x1.5, bought for 1.5 in 1.25k
- RXZ0 177.50c, bought for 26 in ~1.3k
- RXZ0 175/174ps, bought for 11 in 1k
- OEZ0/OEF1 135.25 p calendar, sold the Jan at 11.5 in 2k
- 0RZ0 100.62/100.75cs vs 3RZ0 100.62/100.75cs, bought the 1yr mid for half in 2.5k
- 3RF1 100.37/100.25ps, bought for 1.5 in 13k (ref 100.48, 15 del)
- LH1 100/100.12/100.25c fly, bought for 2 in 3k
LOOK AHEAD:
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.
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