HALISTER1: U.K. June Retail Sales Ex-Fuel Due in 5 Mins; Est. M/m -0.6%

U.K. June Retail Sales Ex-Fuel Due in 5 Mins; Est. M/m -0.6%

(Bloomberg) -- U.K. June retail sales ex-auto fuel m/m est. -0.6% vs prev 1.0%.
  • U.K. June retail sales ex-auto fuel y/y est. 4.8% vs prev 5.7%
  • U.K. June retail sales including auto fuel m/m est. -0.6% vs prev 0.9%
  • U.K. June retail sales including auto fuel y/y est. 5.0% vs prev 6.0%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: Favor Bund Shorts as ECB Unlikely to Ease for Now: Commerzbank

Favor Bund Shorts as ECB Unlikely to Ease for Now: Commerzbank

(Bloomberg) -- Commerzbank prefers shorts in bund futures, eyeing a setback to around 165.80 on view residual expectations for an ECB rate cut today won’t be met, analysts David Schnautz and Michael Leister write in client note.
  • See focus on changes to the PSPP framework; abandoning the depo floor for purchases is the most likely option to address bund scarcity, which argues for further steepening of the curve and underperformance of longer-dated swap spreads
  • Today’s monetary policy decision will probably be of less relevance for the FX market than for the interest-rate market, currency strategist Antje Praefcke writes in separate note
    • It is clear after all that the ECB will not be considering any new expansionary measures before September when the new projections are also due for publication
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Antje Praefcke (Commerzbank AG)
David Schnautz (Commerzbank AG)
Michael Leister (Commerzbank AG)

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UUID: 7947283

HALISTER1: AUCTION PREVIEW: OATs Offer Cross-Market Value; 2Y Issue Concern

AUCTION PREVIEW: OATs Offer Cross-Market Value; 2Y Issue Concern

(Bloomberg) -- France to sell 0% 02/2019, 0% 05/2021, 4.25% 10/2023 for EU6b-EU7b at 10:50am CET, as well as I/L bonds for EU1b-EU1.5b at 11:50am CET.
  • OAT issues seen as offering value on cross-market basis; yesterday’s failed bobl auction raises concern over 2Y OAT issue as it offers similar yield levels
  • France is due to repay EU25b in coupons and redemptions on July 25, given T+2 auction settlement; these cash flows will be reinvested at auction
  • Barclays (Huw Worthington)
    • 02/2019 has cheapened versus peers in past few days with a concession of ~2bps, moving from rich to slightly cheap on the curve; has underperformed versus Germany, Netherlands
    • 5Y bonds have cheapened further on the roll, looks to be good value on the curve; fairly large underperformance cross- market versus Austria, Netherlands and Belgium, with spreads close to the widest levels seen this year
    • 10/2023 issue sits in middle of recent range on the curve; has seen cheapening versus other core, semi-core bonds, as with other bonds on auction today
  • SocGen (Marc-Henri Thoumin)
    • OAT 3s5s looks steep vs OLOs, look for convergence in slopes post-auction
    • 10/2023 has seen a bout of concession both on the curve and versus OLO; has cheapened versus 05/2023 by ~2bps since early July; both 2021 and 2023 issues offer good pick-up vs OLOs
  • Mizuho (Peter Chatwell)
    • After yesterday’s failed bobl auction with yield around –0.51%, today’s 20/2019 auction yielding around –0.49% could also suffer from weak demand
    • 10/2023 has offered a healthy concession before the auction which could help boost demand
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Huw Worthington (Barclays PLC)
Marc-Henri Thoumin (Societe Generale SA)
Peter Chatwell (Mizuho Financial Group Inc)

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UUID: 7947283

HALISTER1: *SHENHUA GROUP SAID TO SEEK CGN MERGER TO FORM $204B POWER GIANT

*SHENHUA GROUP SAID TO SEEK CGN MERGER TO FORM $204B POWER GIANT

--BEN SCENT
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1164 HK (CGN Mining Co Ltd)
1811 HK (CGN New Energy Holdings Co Ltd)
1816 HK (CGN Power Co Ltd)
CGNPCZ CH (China General Nuclear Power Corp)
1088 HK (China Shenhua Energy Co Ltd)

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UUID: 7947283

HALISTER1: Meiji Yasuda AM Underweight GBP, Overweight Gilts Since Brexit

Meiji Yasuda AM Underweight GBP, Overweight Gilts Since Brexit

(Bloomberg) -- Meiji Yasuda Asset Management has been “slightly underweight” on the British pound against the benchmark index it follows since around June 26-27 on speculation the U.K. will not be able to finance its current-account deficit.
  • Meiji Yasuda has about $24b of assets under management as of end-March
  • “It’s natural for companies to wait until an agreement is made for businesses between the U.K. and EU after Brexit, if they want to invest in the U.K.,” Akihiko Tanabe, general manager of the global fixed-income investment department, said in July 20 interview
    • “There’s growing concern about financing the U.K. current-account deficit with direct and portfolio investment. The pound may stay under downward pressure,” he added
  • Meiji Yasuda is “overweight” on U.K. gilts because, although there’s pressure on the yield curve to steepen, BOE still has more room than BOJ or ECB to cut rates or introduce measures to provide liquidity in the private sector
    • BOE is one of the most credible central banks in policy- making, Tokyo-based Tanabe said
  • Meiji Yasuda this week sold Turkish lira due to last week’s failed coup and President Erdogan’s sweeping crackdown on opponents
  • “There will probably be a growing number of our clients who think Turkey is not an appropriate investment destination due to the way the president cracked down after the coup,” Tanabe said
    • “With the current government, Turkey is probably not a safe place to invest,” he added
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Akihiko Tanabe (Meiji Yasuda Life Insurance Co)

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UUID: 7947283

HALISTER1: AUCTION PREVIEW: Mixed SPGB Views; Post-Syndication Demand Seen

AUCTION PREVIEW: Mixed SPGB Views; Post-Syndication Demand Seen

(Bloomberg) -- Spain to sell 0.25% 01/2019, 0.75% 07/2021, 2.90% 10/2046 for EU2.5b-EU3.5b at 10:30am CET.
  • Strong demand at recent syndication is seen as a positive for today’s auction, smaller size of the sale also considered supportive; mixed views on RV
  • Mizuho (Peter Chatwell)
    • 10Y syndication on Tuesday likely to have left some investor demand unsatisfied, given only EU6b of the EU28b book was served
    • Not sure this demand will spill over to today’s auction; yield on 3Y issue now firmly negative, continue to see 5Y sector as rich on SPGB curve
    • Outperformance of 10Y amid the syndication steepened 10s30s, but only sits in the middle of its recent range; still little value in it
  • Santander (Edgar da Silva)
    • If Spain sells top-end of target range, will have completed 70% of targeted bond issuance for the year
    • In RV, see 07/2021 as ~4bps richer than fair value, while 01/2019 SPGB is ~5bps cheaper than fair value
    • 10/2046 trades ~2bps cheap on the curve, offers good opportunity to add duration to an investment portfolio
  • BBVA (Jaime Costero)
    • 2019 last sold at very rich repo levels, has now recovered towards GC; cross-market the issue has cheapened, though see room for some underperformance versus shorter tenors in near future
    • 5Y benchmark has cheapened from rich levels since last sale; remains special in repo market, which makes it difficult to sell short this area; recommend steepeners versus 2.75% 10/2024
    • 30Y has cheapened on the curve, correcting part of its flatness in the longer end; bond looks quite expensive in repo market, adds to attractiveness ahead of the auction
  • Commerzbank (David Schnautz)
    • SPGBs continued to outperform yesterday following Tuesday’s syndication, the size of which was near the low end of target range
    • This is the lowest auction target range since mid- March’s EU2-EU3b following the 30Y syndication; Spain should exhaust the narrow range, look for slightly less than EU1b in 3Y, 5Y issues
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
David Schnautz (Commerzbank AG)
Edgar Da Silva Figueira (Banco Santander SA)
Jaime Costero (Banco Bilbao Vizcaya Argentaria SA)
Peter Chatwell (Mizuho Financial Group Inc)

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UUID: 7947283

HALISTER1: Appeals Court Rejects Seizure of Building Said to Be a Front for Iran

Appeals Court Rejects Seizure of Building Said to Be a Front for Iran

Alert: HALISTER1
Source: NYT (New York Times)

Tickers
1004L US (United States Court of Appeals for the Second Circuit)

People
Amalya Kearse (United States Court of Appeals for the Second Circuit)
Katherine Forrest ((US)Dist Court:NY-Southern)
Preetinder Bharara (United States Attorney's Office For The Southern District Of New York)
Reena Raggi (United States Court of Appeals for the Second Circuit)
Richard Wesley (United States Court of Appeals for the Second Circuit)

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UUID: 7947283

HALISTER1: Turkey Unrest Deals New Blow to Banks Struggling With Bad Loans

Turkey Unrest Deals New Blow to Banks Struggling With Bad Loans

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
SKBNK TI (Sekerbank TAS)
YKBNK TI (Yapi ve Kredi Bankasi AS)

People
Ates Buldur (Credit Suisse Holdings USA Inc)
Mehmet Simsek (Republic of Turkey)
Recep Erdogan (Republic of Turkey)

Topics
Political Coups

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UUID: 7947283