EU RATES OUTLOOK: Duration Supply Set to Increase Next Week
(Bloomberg) -- Auction supply next week is set to jump, topping EU18b with a large amount of duration to come due to long-dated sales from France and Spain. The supply is offset with EU19b in redemptions from Germany (old 10y bund.)
- Potential for quiet start to the week, with cash Treasuries closed on Tuesday due to U.S. holiday, which may result in limited participation
- U.S. employment report is the highlight on the data front. In the U.K., Services PMI data for June on Wednesday
- Another busy week of ECB speakers, with Weidmann (hawk) and Mersch (leaning hawk) due to speak over the weekend. Praet (dove) and Nowotny (middle) due on Tuesday; Praet, Nowotny and Weidmann all appear again on Thursday
- In addition to govt supply, EFSF sent a RfP to banks for a potential deal this week; these issues tend to weigh on the market into pricing
- SUPPLY/REDEMPTIONS: Auction supply may total EU18.9b, equivalent to around EU22m/bp or 150k bund futures in risk terms
- July 4: Austria to sell 0.5% 04/2027, 1.50% 02/2047 for comb. EU1.265b
- July 4: Germany to sell 0.5% I/L 2030 for EU500m
- July 5: Germany to sell 10/2022 for EU4b
- July 6: France to sell 1% 05/2027, 2.75% 10/2027, 2.0% 05/2048 for a combined EU7.5-8.5b
- July 6: Spain to sell 0.4% 04/2022, 4.9% 07/2040, 2.9% 10/2046, with sizes to be announced on Monday; Citigroup estimates EU4b in nominals and EU0.6b in linkers
- There are EU19b in redemptions due to be repaid by Germany (old 10y bund)
- U.K. to sell 1.25% 07/2027 for GBP2.5b on July 6; there are no gilt cash flows eligible for re-investment
- NOTE: Auction calendar is ECO20 WE
To contact the reporter on this story: Stephen Spratt in London at sspratt3@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Keith Jenkins
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