SECURITY: Ukraine "Proximity Talks" To Take Place In Riyadh On Monday (2/2)

OEH5 117.25/117.75cs, bought for 7.5 in 3k.

{GE} BUNDS/SWAPS: German ASWs vs. 3-month Euribor are tighter but trade within 0.5bp of yesterday’s closing levels after debt issuance risks surrounding increased defence spending helped counter the (initially U.S. swap spread-driven) widening seen late last week.

• The Buxl ASW is the only spread which hasn’t fully retraced last week’s move.
• We have suggested that fundamentals point to continued tightening pressure in long end ASW spreads in the medium-term and increased defence spending would add further weight to this idea, as does the potential for debt brake reform.
• More broadly, Commerzbank play down the likelihood any fundamental regulatory shifts within EUR markets, noting note that “while ECB heavyweights are now actively calling for regulatory relief, we doubt that the Leverage Ratio is the binding constraint for € repo intermediation considering GC/specialness dynamics during the past 15 months.”
• As a result, Commerzbank reaffirm their view that “recoveries in (ultra-)long Bund spreads should be used to add to structural shorts.”

Fig. 1: German ASW Spreads (Vs. 3-Month Euribor)

Source: MNI - Market News/Bloomberg

These could pick up with Friday's PMIs in mind, and they will be concluded on the 27th for Gilt and 28th Feb for Treasuries.

JPM:

• WNA: Bullish.
• USA: Bullish.
• UXY: Mildly bearish.
• TYA: Mildly bearish.
• FVA: Bearish.
• TUA: Bearish.

DB:

• WNA: Bullish.
• USA: Bullish.
• UXY: Mildly bearish.
• TYA: Mildly bearish.
• FVA: Bearish.
• TUA: Bearish.

Soc Gen:

• WNA: Bearish
• USA: Neutral/Bearish.
• UXY: Neutral.
• TYA: Mildly Bearish.
• FVA: Bearish.
• TUA: Mildly Bearish.

UBS:

• UBS recommend selling Gilt Roll.