EURIBOR OPTIONS: Large put spread vs call spread

30-Year gilt yields hit the highest level seen since ’98, printing 5.211%.

• 5.25% presents the next logical upside target.
• Very old (1998) broken support on the monthly chart, located at 5.255%, could also act as resistance.
• Fiscal/issuance risks a key driver here, while a tentative/cautious BoE cutting cycle and stickier inflation factor into higher yields across the curve.
• Presence of today's 30-Year supply also a factor intraday
• Higher yields increase the risks to Chancellor Reeves already limited fiscal headroom, boosting odds of further tax hikes (which would act as a growth impediment).

Fig. 1: UK 30-Year Gilt Yield

Source: MNI - Market News/Bloomberg

• Spread set at MS+66bps (guidance was +68bps area)
• Size: EUR Benchmark (MNI expect E7bln with upside risks)
• Books in excess of E67bln (ex JLM interest)
• Maturity: 22-June-2035
• Settlement: 14-January-2025 (T+5)
• Coupon: Annual ACT/ACT, short first to 22-June-2025
• ISIN: BE0000363722
• Bookrunners: BNPP (DM/B&D) / CACIB / HSBC / JPM / MS
• Timing: Books to close at 10:00GMT / 11:00CET; open, today's business

From market source

With Bund at session lows, some desks will be eyeing the Psychological 132.00 level, but most investors will be looking at the 2.50% level in Yield.

Today reference 132.16:

• 2.50% = 131.78 (the main initial level to watch).