CREDIT PRE-MARKET: EUR Market Wrap
Dec-19 07:11
- 2y/10y bunds closed -2bp/+2bp at 2.02%/2.24% - DM team flagged that pre-U.S. cash equity open weakness in e-minis, as well as a hold of technical support in Bunds and intraday lows in gilts, allowed core global FI markets to recover from session lows in the PM against limited macro headline flow. 2y/10y USTs closed +9bp/+12bp.
- The Fed meeting brought multiple hawkish surprises. Not only were the FOMC’s new rate and inflation projections raised more than expected, but the Statement was also more cautious, and there was even a surprise dissent against the well-anticipated 25bp cut. MNI review: https://media.marketnews.com/Fed_Review_Dec2024_ddd282a53d.pdf.
- Also flagging that the BoJ left rates on hold as expected at 0.25%. This was in line with market pricing and most economists also expected no change. The statement appears to contain few surprises. Uncertainties around Japan's economic and inflation outlook are high, which was cited before as a factor delaying rate hikes into 2025.
- Main/XO ended flat/-1bp at 54.1bp/298bp while €IG was +0.4bp at 1% (Corps +0.2bp at 0.94%, Fins +0.7bp at 1.09%, €HY +1bp at 3.03%). $IG was +0.3bp at 0.76% (Corps +0.2bp at 0.76%, Fins +0.4bp at 0.77%, $HY -3bp at 2.67%).
- SXXP/SPX ended +0.1%/-2.9% at 514pts/5872pts. €IG's biggest risers/fallers included Nissan Motor Co Ltd (+24%), Renault SA (+5%), Vestas Wind Systems A/S (+4%), Albemarle Corp (-7%), Havas NV (-7%), Warner Bros Discovery Inc (-6%), Blackstone Inc (-6%).
- SX5E/SPX futures are -1.7%/flat. Later US jobless claims, revised Q3 GDP, December Philly/Kansas Fed indices, November existing home sales and leading index. The BoE decision is announced but it is expected to be on hold.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GILT AUCTION PREVIEW: Tender consultation results due at 7:30GMT
Nov-19 07:11
- The DMO held a consultation yesterday regarding the issuance of a sub 5-year gilt via tender. Results of that consultation will be announced at 7:30GMT this morning.
- We don't have a strong view regarding which gilt will be on offer (other than that it will be one of the off-the-run issues) but regarding the timing there is a possibility that a tender is announced for either Thursday this week (given that this week's only auction is the 3.75% Jan-38 gilt on offer today) or next week when there are no auctions scheduled but the 1.25% Nov-54 Linker syndication is due to be held.
- We have seen some views that the transaction could take place in FQ4 (Jan-Mar) but based on previous tender consultations, we expect the transaction to take place much sooner than that.
BTP TECHS: (Z4) Monitoring Resistance
Nov-19 07:07
- RES 4: 122.62 High Oct 1 and a key resistance
- RES 3: 121.50 76.4% retracement of the Oct 1 - Nov 7 bear leg
- RES 2: 120.81 61.8% retracement of the Oct 1 - Nov 7 bear leg
- RES 1: 120.69 High Nov 15
- PRICE: 120.23 @ Close Nov 18
- SUP 1: 119.12/117.88 Low Nov 13 / 7 and the bear trigger
- SUP 2: 117.70 61.8% retracement of the Jun 11 - Oct 1 bull cycle
- SUP 3: 117.34 Low Jul 26
- SUP 4: 116.54 76.4% retracement of the Jun 11 - Oct 1 bull cycle
BTP futures traded higher last week. Despite the latest bounce, the contract maintains a bearish tone. A resumption of the downtrend would refocus attention on 117.70, a Fibonacci retracement point. Initial support to watch is 119.12, the Nov 13 low. 120.14, the 50-day EMA, has been pierced, a clear break of the average would cancel the bearish threat. This would open 121.50, a Fibonacci retracement point.
EUROZONE ISSUANCE: EGB Supply
Nov-19 06:52
The EU will hold a syndication, whilst Finland, Greece, Germany, Spain and France will hold auctions this week. Slovakia and Belgium have already held auctions this week. We pencil in gross issuance for the week at E31.8bln, up from E23.1bln last week. For a number of countries this will be the last significant week of issuance in 2024.
- The EU will hold a dual-tranche syndication today with taps of the 2.50% Dec-31 EU-bond (ISIN: EU000A3L1DJ0) and the 1.25% Feb-43 Green EU-bond (ISIN: EU000A3K4DG1). The transaction will be launched on Tuesday, subject to market conditions.
- We note that if this syndication is a large enough size it is likely to be the last of the year, with the syndication pencilled in for the W/C 9 December only a reserve operation. We pencil in E4-5bln for each line to get a combined E8-9bln total syndication size.
- Also today, Finland will hold its last conventional auction of the year with up to E1.0bln on offer of the short 5-year 2.875% Apr-29 RFGB (ISIN: FI4000557525) and the on-the-run 10-year 3.00% Sep-34 RFGB (ISIN: FI4000571104).
- Tomorrow, Greece will hold a GGB auction. We pencil in a reopening of the 10-year on-the-run 3.375% Jun-34 GGB (ISIN: GR0124040743) for E200-250mln. Both the GGB on offer and the size will be announced later today.
- Also tomorrow, Germany will hold a 30-year Bund auction. On offer will be E1bln of the 0% Aug-52 Bund (ISIN: DE0001102572) alongside a further E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614).
For more on this week's issuance and a look ahead to next week see the PDF here: EZ241119.pdf
