EGBS: Soft Risk Tone Prompts EGB Spread Widening, Issuance In Focus Today
This morning’s soft tone for risk assets sees 10-year EGB spreads to Bunds widen. The BTP/Bund spread is up 2bps to 120bps, but remains comfortably below last week’s ~126bp close following S&P’s rating upgrade after hours on Friday.
- Books are open for today’s dual tranche 7-year BTP / 30-year BTPei syndication. We pencil in a wide E7-13bln range for the 7-year size, while the 30-year is a E3bln WNG.
- Italian PM Meloni will meet with US President Trump on Thursday, in an attempt to negotiate some tariff reprieve for the EU (including Italy’s export-dependent manufacturing sector). Bloomberg reported yesterday that little progress has been made between the EU and the US at present.
- GGBs underperform for the second consecutive session, with spreads 3bps wider at 90.5bps (though still well shy of last week’s 100bp extreme).
- Greece will sell E200mln of the 3.875% Mar-29 GGB this morning (bidding deadline 1000BST/1100CET).
- In France, state audit chief Moscovici and Finance Minister Lombard appear before the National Assembly’s finance committee. Lombard said over the weekend that E40bln of savings are needed to meet the 2026 budget deficit target of 4.6% GDP. The OAT/Bund spread is 1bp wider at 76.5bps at typing.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
NORWAY: Gas Price Increase Buoys Feb Trade Balance; Fish Exports To US Surge
The Norwegian February trade surplus was NOK84.7bln, a touch below January’s NOK94.1bln. The 12-month rolling trade surplus rose to NOK804bln (vs NOK773bln in January), up 2.7% Y/Y on the back of high gas prices and solid mainland exports.
- Natural gas exports totalled NOK64.2bln, an increase of 85.4% Y/Y. Price growth drove this increase, with gas export volumes falling 6.1% Y/Y to 9.3 billion standard cubic meters.
- Meanwhile, crude oil exports of NOK40.3bln (+1.3% Y/Y) came as volumes rose 8.0% Y/Y, despite prices falling 6.2% Y/Y.
- The I-44 index weakened 3% through February, which also supported exporters. Mainland exports rose NOK64.8bln in February (+15.6% Y/Y and +4.0% M/M). On a 12-month rolling basis, mainland exports were NOK721bln (+1.3% Y/Y). Electricity exports were a large driver of this increase in February.
- Statistics Norway also highlights that monthly fish exports to the USA reached an all-time high in February (NOK1.6bln, +52.9% Y/Y). That’s worth 2.5% of total Norwegian exports to the US. This could represent some early signs of tariff front-loading. Although Norway is not in the EU - so avoids any bloc-wide tariffs - it is still at risk of US President Trump’s reciprocal tariff threats, which may be announced on April 2.
- Stats Norway writes that drivers of the US fish export increase were: “a weaker krone, increased supply of large salmon fish – which is a more sought-after commodity in the US market, and record-high prices for king crab as a result of sanctions against Russia and limited supply”.
EQUITY TECHS: E-MINI S&P: (M5) Oversold But Remains Bearish
- RES 4: 5976.83 50-day EMA
- RES 3: 5864.25 Low Jan 13 and a recent breakout level
- RES 2: 5859.54 20-day EMA
- RES 1: 5726.75 High Mar 12
- PRICE: 5654.75 @ 07:25 GMT Mar 17
- SUP 1: 5559.75 Low Mar 13
- SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
The trend condition in S&P E-Minis remains bearish and fresh cycle lows last week reinforced current conditions. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5976.83, the 50-day EMA.
EGBS: J.P.Morgan Recommend Underweight 3-Year OATs
J.P.Morgan think that the 3s/10s OAT curve is too steep, while pointing to “anecdotal evidence suggesting concentrated overweight carry exposures in the short-end the OAT curve”.
- As a result, they deem underweight short-end OAT plays “attractive for risk-off exposure”.
- They have recommended converting an existing underweight France vs. Spain 3s to underweights 3Y France vs. Germany to increase beta of the related positioning to risk-off moves.
