FINANCIALS: BFCM - New Issue - € B'mark 10Y Sr Non-Pref - Books

The sharp Deepseek-triggered slide in equity futures is helping underpin haven currencies this morning, tipping USD/JPY to new YTD lows. It's GBPJPY that should draw some interest given the risk-off haven rally as well as GBP's recent spell of uncertainty - which drove GBP/JPY 1week vol turnouts to hit levels last seen in the wake of the November US elections.

• While the cross's leg lower today is nearing 1%, it's still clear of Friday lows at 192.08. Importantly, the cross is less exposed to the central bank flurry midweek (Fed, BoC, ECB), so should be more clearly pinned to market sentiment and global equities.
• 2025 range has been defined by the upleg posted off late November lows - with markets finding both the 76.4% retracement of the fade off highs as a decent support mid-January and 194.81, the 38.2% Fib, as a solid inflection point to cap last week's rally.

SX5E (21st Feb) 160p vs (20th Jun) 130p, bought the Feb for 0.70 as a 1x1.5 put spread in 12k (12kx18k).

• The DMO announced earlier this morning that it would be looking to hold a tender on Thursday this week for a potential conventional sub-5 year gilt.
• We note that already in this fiscal year the 0.125% Jan-26 gilt (ISIN: GB00BL68HJ26) has been reopened via tender twice for GBP2.0bln in September and November.
• This gilt is still trading at a premium to the rest of the curve (even when taking into account its low coupon) and we think that there is still strong demand for this gilt in the market.
• We think the market agrees with our assessment as the 0.125% Jan-26 gilt is underperforming similar gilts around a similar maturity this morning.
• In terms of the size, there is only GBP2.6bln remaining in the unallocated bucket and we still have a 10-year syndication of GBP8.5bln and linker syndication of GBP4.5bln remaining this year. Given this tender and those two remaining syndications, we think it looks unlikely the linker syndication will be upsized if we see a sizeable tender this week, but still see a change of the 10-year syndication being increased to GBP10.0bln.
• If the DMO wanted to leave the option to upsize the 10-year syndication, the maximum size of the tender would be around GBP1.25bln nominal. With the two tenders being for GBP2.0bln, however, there is the chance of a larger size.
• We therefore pencil in a GBP1.0-2.0bln size for this week's transaction. Note that there is no PAOF applicable to gilt tenders.
• The DMO is open for consultation comments until 15:30GMT today and will make an announcement regarding the timing and size of the tender at 7:30GMT tomorrow.

Corrected to say "underperforming" rather than "outperforming" this morning.