CONSUMER STAPLES: Elo/Auchan; FY earnings results leaks (x3)

The earlier rally in major EGB futures has largely faded, with Bund futures now little changed today at 131.94, down from a session high of 132.22. The 20-day EMA at 132.37 remains a key resistance level in Bunds. 

• OAT and BTP futures led the morning rally, seemingly driven by the bid in European equities.
• Several ECB policymakers have provided comments from the Davos forum, headlined by President Lagarde. However, comments were largely consistent with current OIS pricing, limiting the market reaction.
• Books for Spain’s 10-year Obli syndicated tap are in excess of E150bln, while the spread for Finland’s new 20-year RFGB has been set. Germany will hold a 15-year Bund auction at 1030GMT/1130CET.
• German cash yields are little changed, with a light twist steepening bias seen.
• 10-year peripheral/semi-core spreads to Bunds have tightened, as European equities rally. OATs outperform, though meaningful OAT/Bund tightening below 75bps may be limited by medium-term fiscal/political risks.
• The remainder of today’s macro calendar is light, with focus on ECB speakers and any tariff-related headlines from the US.

ross-market cues dominate this morning, with a bid in equities and peripheral EGBs initially leading gilts higher, before a pullback from highs.

• Futures -3 at 92.20, range 92.12-52.
• Futures breached yesterday’s high, peaking at 92.52, but failed to challenge Fibonacci resistance at 92.75.
• The overarching technical setup remains bearish, but the recent recovery poses a risk to that trend.
• Bears need to force a move through the Jan 16 low (90.68) to assert fresh pressure.
• Yields essentially flat across the curve.
• 10-Year spread to Bunds ~1bp wider around 208.5bp after the first sub-210bp close since November.
• Higher-than-expected PSNB may have factored into the spread widening this morning.
• BoE-dated OIS shows 67bp of cuts through year-end, ~4bp more dovish on the day.
• The Brightmine wage survey (released overnight) may be having some impact in STIRs.
• Median basic pay awards in the 3 months to December dropped to 3.3%, the second consecutive softening in pay awards.
• The press release that accompanied the data noted that "the combination of rising NICs and ongoing economic pressures is likely to result in a decrease in 2025 pay awards compared to the median increase of 4.5% recorded in 2024."
• Chancellor Reeves will speak to CEOs later today, early Wednesday comments from her offered no new information.

IGCP has bought back E430mln of the 2.875% Oct-25 OT at 100.38 in today’s buyback operation.