ZAR: Rand Treads Water, Ramaphosa Downplays Political Crises
Feb-21 08:39
USD/ZAR last deals at 18.3366, barely changed on the session. The pair operates in the vicinity of nearby support levels (Jan 24/Feb 14 lows of 18.3022/18.2995). Conversely, Jan 13 high of 19.2296 provides a key layer of resistance.
- President Cyril Ramaphosa played down the significance of tensions with the US and the recent delay to the 2025 Budget and pledged to seek progress on both fronts. Separately, EU top diplomat Kaja Kallas told reporters in Johannesburg that the bloc will seek closer relations with South Africa.
- SAGB yields have edged lower across the curve, with South Africa's 5-year and 10-year breakeven inflation rates ticking away from recent cyclical highs.
- The aggregate BBG Commodity Index has slipped. The precious metals subindex has shed 0.8%, with gold changing hands ~$18.2/oz. lower.
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Historical bullets
EGB SYNDICATION: Spain 10-year Obli: Books open
Jan-22 08:32
- Guidance: 3.45% Oct-34 Obli (mid) +8bp area
- Size: EUR benchmark (MNI expects E10-15bln)
- Maturity: 30 April 2035
- Coupon: Short first
- ISIN: ES0000012O67
- Settlement: 29 January 2025 (T+5)
- Bookrunners: BBVA, CACIB, DB (B&D/DM), JPM, MS, SANTANDER
- Timing: Books open, today's business
From market source
BUNDS: BTP/Bund spread targets the December low
Jan-22 08:32
- French OAT and the BTP have been helping the German Bund back through its opening gap, small immediate resistance was seen at 132.14 Yesterday, and the contract printed a 132.15 high, this remains.
- Above that area, it opens to 132.41, but better is seen at 132.57.
- The price action is pushing the BTP/Bund spread towards 106.16bps, the December low, and tightest printed spread since October 2021.
(Chart source: MNI/Bloomberg):
EGBS: /SWAPS: Citi: Periphery Looks Attractive Vs Swaps
Jan-22 08:27
Citi note that “EGB supply pressure has likely peaked. There also seems little EGB supply indigestion so far. While these concerns remain, we find the overall risk-reward tilted supportive towards EMU periphery vs swaps.”
- They “especially like PGBs for this given we don’t expect the next syndication until April and today’s buyback absorbs some of the duration. This informed our recommendation last week to buy 20yr PGBs vs. swaps following the underperformance of the sector on the curve.”
