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EGBS: Recovery In Bund Futures Capped By Overnight Highs

EGBS
BulletEurozoneFixed Income BulletsMarkets

Overnight highs capped the late-morning recovery in Bund futures today, but RXH5 remains on course for a fifth consecutive downward session. Currently -23 ticks today at 131.49, a bearish technical theme in Bund futures remains in tact. Clearance of today’s low (131.32) would expose 131.28, the November 14 low on a continuation chart.

  • 10-year Bund yields have consolidated above 2.500%, over 50bps above levels seen at the start of December.
  • Regional headline flow has been relatively light today, with supply once again the main point of interest.
  • Both the Spanish and French auctions passed smoothly. Spain sold E6.222bln of nominals (the top half of its E5.5-6.5bln target) while France sold E12.997bln of LT OATs (top of the target range and the largest auction since March).
  • Today’s E4bln 10-year PGB syndication saw books close in excess of E25bln. The 10-year PGB/Bund spread has narrowed ~2bps since the syndication priced, now 0.5bps tighter today at 43bps.
  • Tomorrow’s regional calendar includes industrial production data from France and Spain, with Italian retail sales also due. Broader macro focus will be on the US labour market report.
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Overnight highs capped the late-morning recovery in Bund futures today, but RXH5 remains on course for a fifth consecutive downward session. Currently -23 ticks today at 131.49, a bearish technical theme in Bund futures remains in tact. Clearance of today’s low (131.32) would expose 131.28, the November 14 low on a continuation chart.

  • 10-year Bund yields have consolidated above 2.500%, over 50bps above levels seen at the start of December.
  • Regional headline flow has been relatively light today, with supply once again the main point of interest.
  • Both the Spanish and French auctions passed smoothly. Spain sold E6.222bln of nominals (the top half of its E5.5-6.5bln target) while France sold E12.997bln of LT OATs (top of the target range and the largest auction since March).
  • Today’s E4bln 10-year PGB syndication saw books close in excess of E25bln. The 10-year PGB/Bund spread has narrowed ~2bps since the syndication priced, now 0.5bps tighter today at 43bps.
  • Tomorrow’s regional calendar includes industrial production data from France and Spain, with Italian retail sales also due. Broader macro focus will be on the US labour market report.