OIL PRODUCTS: China’s State-Owned CDU Rates to Fall 3% in April: OilChem

0RJ5 98.25/98.50cs, bought for 3.75 in 5k.

Bund & Buxl ASW spreads (vs. 3-month Euribor) are ~1.5bp tighter on the day.

• Intraday cycle lows in both Bund & Buxl ASWs remain intact.
• No surprise to see narrowing in the long end of the German ASW curve after RTRS sources suggested that “the parties in talks to form Germany's new government are considering quickly setting up two special funds potentially worth hundreds of billions of euros, one for defence and a second for infrastructure”.
• The piece went on to note that “economists advising the parties that will likely form a new government coalition estimate around EUR400bln are needed for the defence fund and EUR400-500bln for the infrastructure fund”.
• This is much more sizeable than the ~EUR200bln defence fund size that markets had been discounting previously.
• We've written a lot on how fundamentals continue to screen bearish for German long end swap spreads, confirmation of a larger-than-previously-expected special fund would add weight to this view.
• However, we continue to note that debt brake negotiations and already short positioning in spreads are likely to promote vol.

• MNI: UK FINAL FEB MANUF PMI 46.9 (FLASH: 46.4); JAN 48.3