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BONDS: Overnight Rally Fades, Bund & Gilt Futures Stick Within Yesterday's Range

BONDS
BulletMarketsFixed Income Bullets

Bonds drift lower in recent trade, with Bunds under the most pressure amongst core global FI markets.

  • Yesterday’s low in futures (132.90) presents the initial downside target in the German contract. Lows of 132.95 seen thus far, before a recovery back above 133.05.
  • German yields 3bp higher to 1bp lower, twist flattening. 5s30s now ~2bp off yesterday’s multi-month closing high, last 42bp.
  • OATs relatively unreactive to the AFTs announcement covering next week’s issuance detailed in the earlier bullet.
  • While the amount on offer is relatively large, it still falls within the broader range of expectations given the agency’s ’25 funding requirements and front-loaded issuance norms.
  • OAT/Bunds +1.5bp to 86.5bp, ~0.5bp wider since the AFT announcement, nearing ’24 closing highs of 88.4bp.
  • Prolonged fiscal and political risks continue to promote OAT widening in early ’25, with the government seemingly on track to table a Budget that will displease the right and left of the political spectrum.
  • Remaining EGB spreads to Bunds are little changed to 1.5bp wider.
  • ~109bp of ’25 cuts priced into ECB-dated OIS vs. ~112bp early today.
  • Early bid in gilts fades, with cues from broader bonds dominating.
  • Futures last little changed at 92.40, yesterday’s range intact
  • Yields 2-3bp lower, curve flatter.
  • 2s10s and 5s30s edge away from yesterday’s multi-month closing highs.
  • ~2bp of outperformance for UK 10s vs. Bunds, takes the spread back below 220bp.
  • ~60bp of BoE cuts priced for ’25, little changed on the day.
  • Comments from ECB’s Lane due later, although more focus will fall on the U.S. ISM m’fing survey.
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Bonds drift lower in recent trade, with Bunds under the most pressure amongst core global FI markets.

  • Yesterday’s low in futures (132.90) presents the initial downside target in the German contract. Lows of 132.95 seen thus far, before a recovery back above 133.05.
  • German yields 3bp higher to 1bp lower, twist flattening. 5s30s now ~2bp off yesterday’s multi-month closing high, last 42bp.
  • OATs relatively unreactive to the AFTs announcement covering next week’s issuance detailed in the earlier bullet.
  • While the amount on offer is relatively large, it still falls within the broader range of expectations given the agency’s ’25 funding requirements and front-loaded issuance norms.
  • OAT/Bunds +1.5bp to 86.5bp, ~0.5bp wider since the AFT announcement, nearing ’24 closing highs of 88.4bp.
  • Prolonged fiscal and political risks continue to promote OAT widening in early ’25, with the government seemingly on track to table a Budget that will displease the right and left of the political spectrum.
  • Remaining EGB spreads to Bunds are little changed to 1.5bp wider.
  • ~109bp of ’25 cuts priced into ECB-dated OIS vs. ~112bp early today.
  • Early bid in gilts fades, with cues from broader bonds dominating.
  • Futures last little changed at 92.40, yesterday’s range intact
  • Yields 2-3bp lower, curve flatter.
  • 2s10s and 5s30s edge away from yesterday’s multi-month closing highs.
  • ~2bp of outperformance for UK 10s vs. Bunds, takes the spread back below 220bp.
  • ~60bp of BoE cuts priced for ’25, little changed on the day.
  • Comments from ECB’s Lane due later, although more focus will fall on the U.S. ISM m’fing survey.