JGBS: SocGen Reaffirm End '25 10-Year Forecast, Bar For BoJ Action "Very High"

Couple of Bank Options:

• SX7E (20th Jun) 160/140ps, bought for 4.40 in 6k.
• SX7E (20th Jun) 177.5c, bought for 2.45 in 5k.

Light outperformance in 10-year peripheral bonds against Bunds, with European equity futures off Friday’s lows. The rally in European NatGas prices is likely helping to contain upside across core/semi-core EGBs this morning. 

• The BTP/Bund spread is ~1bp tighter at ~108.5bps, after 106bps once again provided a floor to the spread last week. We look for a 2040 BTP to be launched via syndication in February, although with a decent risk of the transaction slipping into March.
• The OAT/Bund spread is a little tighter at ~71.5bps. However, medium-term political risks remain prevalent despite PM Bayrou surviving last week’s censure motions, after he forced the 2025 budget through the National Assembly using Article 49.3.
• Our Political Risk team highlighted last Friday that there is significant uncertainty surrounding the so-called 'spontaneous censure motion' that the PS intends to bring against the gov't this week. With the PS and presumably the rest of the leftist New Popular Front (NFP) alliance parties in favour, if the far-right RN backs the motion it would be enough to oust Bayrou. 

OAT Block trade, suggest buyer.

• OATH5 ~1.1k at 124.37.