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EGBS: Spreads To Bunds Widen As Equities & Core FI Sell Off

EGBS
BulletEurozoneFixed Income BulletsMarkets

Weakness in core global FI markets and European equities promotes widening for EGB spreads vs. Bunds.

  • BTPs under the most pressure, widening by ~3.5bp, leaving BTP/Bunds at 120.5bp, within its multi-week range. Incoming BTP supply likely adding further pressure.
  • Elsewhere, OATs are ~1.5bp wider vs. Bunds, 85bp caps widening moves for now. ’24 cycle closing highs at 88.4bp presents the major area of upside interest
  • Participants eye French PM Bayrou’s inaugural speech to parliament, due Tuesday. French fiscal and political risks remain evident, albeit with Bayrou’s Budget cuts seemingly set to be slightly less aggressive than the draft that toppled former PM Barnier.
  • GGBs also widen by ~3p vs. Bunds, unwinding a little of their early ’25 outperformance.
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Weakness in core global FI markets and European equities promotes widening for EGB spreads vs. Bunds.

  • BTPs under the most pressure, widening by ~3.5bp, leaving BTP/Bunds at 120.5bp, within its multi-week range. Incoming BTP supply likely adding further pressure.
  • Elsewhere, OATs are ~1.5bp wider vs. Bunds, 85bp caps widening moves for now. ’24 cycle closing highs at 88.4bp presents the major area of upside interest
  • Participants eye French PM Bayrou’s inaugural speech to parliament, due Tuesday. French fiscal and political risks remain evident, albeit with Bayrou’s Budget cuts seemingly set to be slightly less aggressive than the draft that toppled former PM Barnier.
  • GGBs also widen by ~3p vs. Bunds, unwinding a little of their early ’25 outperformance.