LNG: India LNG Spot Demand To Fall As Longer-Term Contracts Signed

{GE} BUNDS/SWAPS: Continued outperformance in the front end of ASW spreads has taken the Schatz/Buxl ASW curve to fresh cycle highs near 50bp (based on 3-month Euribor ASWs).

• Increasing free float and fiscal/issuance risks have driven much of the move in the spread.
• The same drivers should continue to limit any widening episodes in long end spreads, although positioning presents some upside risk to long end spreads (in the case that an upside catalyst becomes apparent).

Fig. 1: Schatz/Buxl ASW Spread (Vs. 3-Month Euribor)

Source: MNI - Market News/Bloomberg

• As previously mentioned, mostly a two way early price action in Govies, Bund is back at its very tight session high, there's been some buying interest in French OAT, and the shorter end Schatz and Bobl, but very limited impact in Rates (Euribor) since the moves are more risks driven (tariffs, Equities) as oppose to interest Rate.
• The early volume still stands out in the US, but stays fairly subdued in Europe.

• The DMO will kick off issuance for the week this morning by launching the new 10-year 1.125% Sep-35 linker for GBP1.5bln.
• This will replace the 0.75% Nov-33 linker as the on-the-run 10-year issue.
• Auctions for that linker were strong with the lowest bid-to-cover in the five auctions so far this fiscal year at 2.89x (with a mean of 3.16x and 3.39x seen in the last auction in December).
• All of these auctions have been for GBP1.5bln nominal. We expect another strong linker auction. The 1.125% Sep-35 linker is due to be reopened on 25 February.
• Timing: Results will be available shortly after the bidding window closes at 10:00GMT with a further GBP375mln available to successful bidders via the PAOF.