GILTS: Lower As Bunds Soften
Cues from EGBs (spreads to Bunds tighter) and the bid in European equities weighs on gilts this morning.
- Futures through the base of yesterday’s range but the move is still quite limited, lows of 95.58 registered in recent trade.
- A bullish corrective cycle remains in play in the contract and recent gains reinforce the short-term condition.
- Initial support and resistance derived from range extremes seen over the past couple of session, 95.49/96.18.
- Yields 1.0-2.5bp higher, curve a touch flatter.
- 2s10s trades either side of 0bp, around the middle of the ~17bp range witnessed over the last 2 months or so.
- 5s30s in the middle of their multi-month range, last ~65bp.
- Weakness in bonds filters into STIRs.
- SONIA futures flat to -3.0.
- BoE-dated OIS flat to 4bp less dovish on the day, showing 20bp of cuts through February, 27bp through March and 75bp through December.
- Dovish BoE dissenter Dhingra will appear on Bloomberg TV at 10:40 London.
- Her dovish views are well-documented, and we don’t expect a meaningful change in tone in this appearance.
- Further out, this afternoon’s U.S. NFP release dominates the macro calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.695 | -0.5 |
Feb-25 | 4.500 | -20.0 |
Mar-25 | 4.430 | -27.0 |
May-25 | 4.270 | -43.0 |
Jun-25 | 4.195 | -50.5 |
Aug-25 | 4.073 | -62.7 |
Sep-25 | 4.045 | -65.5 |
Nov-25 | 3.975 | -72.5 |
Dec-25 | 3.950 | -75.0 |
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GERMAN AUCTION RESULTS: 2.60% May-41 Bund / 2.50% Aug-46 Bund
| 2.60% May-41 Bund | 2.50% Aug-46 Bund | |
| ISIN | DE000BU2F009 | DE0001102341 |
| Total sold | E1bln | E500mln |
| Allotted | E805mln | E409mln |
| Previous | E0.846bln | E0.603bln |
| Avg yield | 2.64% | 2.63% |
| Previous | 2.52% | 2.53% |
| Bid-to-offer | 1.61x | 3.69x |
| Previous | 2.76x | 3.30x |
| Bid-to-cover | 2.00x | 4.50x |
| Previous | 3.27x | 4.10x |
| Avg price | 99.48 | 97.79 |
| Low price | 99.48 | 97.78 |
| Pre-auction mid | 99.439 | 97.745 |
| Prev avg price | 101.05 | 99.41 |
| Prev low price | 101.04 | 99.40 |
| Prev mid-price | 100.989 | 99.324 |
| Previous date | 09-Oct-24 | 24-Jan-24 |
US ELECTIONS: Immediate Analyst Views
With Donald Trump set to return to the White House in January 2025, there will be a flurry of research and analysis in the coming days and weeks on what a second Trump presidency could look like in terms of political, economic, security, and market impacts across the globe. With that in mind, below we highlight some initial analyst views in the immediate aftermath of the election.
Full article PDF attached below:
EGBS: German Curve Twist Steepens As US Election Result Digested
The German curve has twist steepened this morning, as global markets digest the US Presidential Result. The negative Eurozone growth implications of increased US tariffs has prompted a dovish repricing in 2025 ECB implied rates, driving a 10bp fall in German 2-year yields.
- 15-year Bund supply is due at 1030GMT/1130CET.
- Bund futures are +36 ticks at 131.81, but the technical trend condition remains bearish.
- Lingering concerns around the stability of the German traffic-light coalition remain, with talks amongst Chancellor Scholz and his partners Lindner and Habeck set to resume this evening.
- 10-year peripheral spreads to Bunds are slightly wider.
- The final October Eurozone composite and services PMIs saw upward revisions, but were not market movers.
- ECB’s Vujcic, Lagarde, de Guindos and Villeroy are all scheduled to speak this afternoon.
