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Outrights Cheapen, GGBs Widen

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Early weakness in benchmark European & UK bond futures failed to provide meaningful breaks below round number support (130.00 for Bunds & 95.00 for gilts), before a tick away from cheaps.

  • Weekend comments from various ECB Governing Council members pushed back against the idea of near-dated rate cuts, while some more hawkish comments (Holzmann & Kazimir) stressed that we may not have reached terminal rate levels.
  • Impetus from the back end of last week and another ’23 high for crude oil futures (although they are off best levels, last trading around flat) were eyed initially.
  • German cash benchmarks run 0.5-1.5bp cheaper, Bund futures -15.
  • GGBs widening noted in 10s. Moody’s two-notch rating upgrade of Greece to one step below IG (in line with Fitch & S&P) was probably the best that the country could have hoped for in one step. Still, the ‘stable’ outlook will have disappointed participants and is aiding the widening.
  • Gilt benchmarks are 1.5-3.5bp cheaper across the curve, futures -30.
  • UK headline flow has focused on familiar areas, with participants eying this week’s domestic CPI data and BoE monetary policy decision (~21bp of tightening priced, ~39bp of cumulative tightening priced for current cycle).
  • Gilts widen vs. Bunds across the curve.
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Early weakness in benchmark European & UK bond futures failed to provide meaningful breaks below round number support (130.00 for Bunds & 95.00 for gilts), before a tick away from cheaps.

  • Weekend comments from various ECB Governing Council members pushed back against the idea of near-dated rate cuts, while some more hawkish comments (Holzmann & Kazimir) stressed that we may not have reached terminal rate levels.
  • Impetus from the back end of last week and another ’23 high for crude oil futures (although they are off best levels, last trading around flat) were eyed initially.
  • German cash benchmarks run 0.5-1.5bp cheaper, Bund futures -15.
  • GGBs widening noted in 10s. Moody’s two-notch rating upgrade of Greece to one step below IG (in line with Fitch & S&P) was probably the best that the country could have hoped for in one step. Still, the ‘stable’ outlook will have disappointed participants and is aiding the widening.
  • Gilt benchmarks are 1.5-3.5bp cheaper across the curve, futures -30.
  • UK headline flow has focused on familiar areas, with participants eying this week’s domestic CPI data and BoE monetary policy decision (~21bp of tightening priced, ~39bp of cumulative tightening priced for current cycle).
  • Gilts widen vs. Bunds across the curve.