EQUITIES: Estoxx future test immediate support
Jul-05 06:45
- VGU3 test small immediate support seen at 4398.00, and further downside traction will open to 4366.00.
- The Dollar is in turn testing new high versus GBP, CNY, MXN, CNH, CAD, AUD, JPY, SEK, NZD, CHF.
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BTP: Sell-Side Weighs In On Friday’s Tightening
Jun-05 06:40
We flagged BTP tightening as the standout move in EGBs on a couple of occasions on Friday. Some sell-side thoughts on the matter are outlined below:
- Commerzbank note that “10-Year BTP-Bund spreads closed below 175bp for the first time since March, which is also close to the lowest levels seen so far this year. Without domestic news, the tightening was seemingly driven by risk-on, lower inflation and possibly a pause in BTP supply for institutionals (the BTP Valore for retail investors is due this week). We remain cautious with regard to BTPs though ahead of the TLTRO repayment and see better value in wideners at current levels.”
- UniCredit note that “while the move may have been exacerbated by reduced liquidity in the BTP market due to a public holiday in Italy, it nevertheless underpins a positive sentiment for the country, as well as expectations of robust demand from domestic retail investors. Today, Italy will open the sale of the BTP Valore, an instrument reserved for retail investors, which offers an attractive return of almost 3.80% for buy-and-hold investors. Strong demand at this sale, which will take place throughout this week, would bolster sentiment.”
BONDS: Eurex roll
Jun-05 06:35
Eurex Roll pace (expiry Wednesday):
- Buxl: 61%.
- Bund: 53%.
- Bobl: 50%.
- Schatz: 58%.
- BTP: 47%.
- BTS: 40% (below pace).
- OAT: 61%.
SWITZERLAND DATA: CPI Continues to Decelerate in May
Jun-05 06:33
SWITZERLAND MAY CPI +0.3% M/M (= FCST); APR 0.0% M/M
SWITZERLAND MAY CPI +2.2% Y/Y (= FCST); APR +2.6% Y/Y
- Swiss inflation is continued to cool in the May data, matching expectations with 0.3pp deceleration to +2.3% y/y, the lowest since Feb 2022.
- On the month, prices re-accelerated by +0.3% m/m, largely on the back of increased housing, package holiday and food prices.
- Total goods inflation rose +0.3% m/m (largely boosted by food), slowing 0.8pp to +2.7% y/y, whilst services accelerated by +0.2% m/m and ticked down 0.1pp to +1.8% y/y.
- The Swiss core CPI rate was 0.1pp lower than expected, edging down 0.3pp to +1.9% y/y. This was the first sub-2% core print since Oct 2022 and is a positive sign of cooling price pressures for the Swiss National Bank.
- Yet with headline CPI still above target, the June 22 SNB meeting baseline currently looks for a further 25bps hike. Markets are pricing a SNB peak rate of between 1.75% and 2.00%.
