CZK: Koruna Finds Poise, EUR/CZK Bears Eye 25.0 Mark

Bund futures have weakened through the morning, with the weaker-than-expected German ZEW survey providing little reprieve. Futures are -2 ticks today at 131.82.

• Fallout from US President Trump’s inauguration remains a key focus, with Bunds having moved away from overnight highs alongside Treasuries as markets assess the President’s jawboning around tariffs. Today's EGB supply developments will have also factored into price action.
• Bund futures have entered a corrective phase following the recovery from the January 14 lows, and a continuation higher would open 132.41, the 20-day EMA. The medium-term trend is unchanged though, it remains bearish.
• The German curve has twist flattened, with 2-year yields 1bp higher and 30-year yields 2.5bps lower.
• Orderbooks for today’s 15-year OAT syndication are in excess of E135bln, a record size for a French transaction. MNI expect a size of E5-8bln, with upside risks of E9-10bln.
• Lithuania are also holding a dual-tranche syndication today, while Germany has held a conventional green Bund auction.
• Spain has issued a mandate for a new 10-year Obli. We pencil in a transaction size of E10-15bln.
• 10-year peripheral spreads to Bunds are within 1bp of yesterday’s closing levels.
• ECB dove Centeno is scheduled to speak at 1100GMT/1200CET.

Gilts are little changed on the day.

• Spill over from risk-off Asia-Pac trade centred on the latest developments surrounding U.S. tariffs quickly faded as the broader risk-off move moderated.
• Modest weakness surrounding the book opening of the 4.375% Jan-40 gilt syndicated tap also faded quickly, as bookrunners had previously flagged that the deal would be today’s business.
• Little lasting impact from mixed labour market data, which saw firm private sector wages and soft quantity outcomes. Accuracy of the data remains in question.
• Futures +2 at 91.60. range of 91.51-91.79.
• Initial resistance at the January 17 high (91.96) untested.
• That leaves the bearish technical trend intact in the contract, initial support at the January 16 low (90.68).
• Yields essentially unchanged across the curve.
• 2s10s and 5s30s curves remain below January highs.
• Focus on hedging around pricing of the aforementioned syndication.
• Books topped GBP119bln including JLMs, with the spread set at tight end of the guidance range. Books are now closed.
• BoE-dated OIS shows ~61bp of cuts through ’25 vs. 62bp late yesterday.
• SONIA futures flat to -2.0.
• Macro/Trump policy cues eyed.

• Spread set previously 4.25% Sep-39 gilt +4.00bp (Guidance was +4.00/+4.25bps)
• Size: GBP8.5bln (MNI had expected GBP5.0-6.5bln)
• Books in excess of GBP119bln (inc JLM interest)
• Expected Settlement Date: 22-January-2025 (T+1)
• ISIN: GB00BQC82D08
• Joint Leads: DB (B&D / DM) / JPM / MS / Nomura / RBC CM
• Timing: Today’s business

From market source / Bloomberg