US TSY FUTURES: BLOCK: Marc'25 10Y Sale

J.P.Morgan write “trade war/tariff uncertainty from US Trump policy remains a downside risk to Euro area growth and given the recent back up we now turn bullish on Euro duration (receive 1Yx1Y ESTR, enter longs in 10Y Bunds).” 

• They think that the “heavy January supply calendar is already baked into intermediate German yield valuations.”
• Meanwhile, in the UK, they believe that “valuations in GBP rates are cheap vs. our BoE forecast (~60bp of easing priced over 2025 vs. J.P.Morgan’s 100bp forecast)” but “are more cautious on entering outright longs in GBP rates given the fiscal easing announced in October adds uncertainty over the path of BoE easing.”

• "The Republic of Italy has mandated Banca Monte dei Paschi di Siena S.p.A, BNP Paribas, Citibank Europe Plc, Crédit Agricole Corp. Inv. Bank, NatWest Markets N.V. and UniCredit S.p.A for a dual tranche syndicated issuance of a new 10-year BTP due 1 st August 2035 and a €5 billion no-grow issuance of a new BTP Green due 30th April 2046." Source: MEF
• We had noted that we thought there would be an Italian syndication this week and that we would see a new 10-year BTP launched in January (but we had thought the 10-year launch would be via auction and that we would have seen a 15-year via syndication this week).
• We pencil in a transaction tomorrow with E10bln for the 10-year tranche in addition to the E5bln WNG size for the new green 20-year (the 20-year area was one we had highlighted as the potential for a new green BTP).

• The upside continuation in US Equities, these are small slow moves, help the European Tech sector {SX8P Index} back towards it earlier intraday high.
• The initial rally in Tech stocks started Yesterday after Microsoft said that it planned to spend $80bn on AI centers this Year.
• SX8P is breaking above 850.00, the highest traded level since late July, and next resistance is seen further out, up to 864.89.