September 11, 2023 09:14 GMT
Off Lows, GGBs Marginally Tighter After DBRS Upgrade
Bunds find a base alongside U.S. Tsys as the BoJ-driven weakness seen in Asia-Pac hours moderates a touch.
- That leaves Bund futures -20, while German cash benchmarks are 0.5bp richer to 1.5bp cheaper, twist steepening.
- Bears couldn’t force a challenge of initial technical support in Bund futures (130.35, the Sep 7 low).
- Most other EGB curves twist/bear steepen a little.
- Core/semi-core paper little changed when it comes to spreads vs. Bunds.
- Greek paper is the outperformer, although only marginally so, as 10-Year GGBs tighten by ~1.5bp vs. Bunds post-Greece’s (widely expected) IG status attainment at DBRS Morningstar on Friday. A reminder that achievement isn’t a gamechanger for GGBs on the index inclusion front.
- The regional docket is limited today.
- Eurozone commission marked down Eurozone GDP projections, while lowering its CPI forecast for ’23 & lifting it’s CPI outlook for ’24.
- While there is nothing formally slated on the EGB issuance front on Monday, we remain on the lookout for details of a possible EU syndication after the recent RFP and guidance (some desks look for a new 7-Year line).
- We also note that the net issuance backdrop is much more supportive for EGBs this week (negative net supply when accounting for coupons/maturity repayment).