U.S. Pressure Spills Into Europe

Little to really flag when it comes to market specifics for gilts and core EGBs in recent trade. We have seen some headlines re: modest €IG issuance pricing, although we point to the block/$IG induced weakness in U.S. Tsys as the more likely driver here.

• This morning’s syndication announcement from the EU was generally in line with wider expectations (including a new Dec-28 5-Year line and a tap of the Feb-48 green line) and will be launched tomorrow, subject to market conditions. It had little, if any, tangible impact on Bund prices.
• Bund futures have registered fresh session lows in recent trade but haven’t breached Friday’s base as of yet. German cash benchmarks last sit 1-2bp cheaper, with the 5- to 10-Year zone coming under the most pressure vs. Friday settlement.
• Gilt futures haven’t managed to test early session lows but sit ~30 below unchanged. Cash gilt yields are flat to 3.5bp higher on the day, with the curve bear flattening. Domestic political headlines and fiscal speculation ahead of next week’s budget has dominated UK headline flow thus far.