Halister News

(Bloomberg) -- Cash-flow environment remains supportive for govt bonds, with large redemptions totaling almost EU80b coming due over the next 10 days. Month-end index extension estimates are above average in Europe and very large for gilts.

• Eurozone flash PMI releases on July 24 may provide markets with a first look at 3Q data
• In the U.K., the large month-end extension and upcoming coupon payments have been widely highlighted. On the data front, 2Q GDP advance release is due on July 26
• Bloomberg Barclays index extension estimates show Treasury 0.07y, Eur Agg at 0.10y, and Sterling at 0.21y; breakdown here
• Citigroup sees extension of 0.09y for Europe, third-largest this year, with most support given to France, Spain and Italy; country breakdown here
  • Gilts are 0.41y, the largest in five years, primarily driven by 07/2018 UKT dropping out of the index
• SUPPLY/REDEMPTIONS: Auction supply may total around EU12b, equivalent to over EU9m/bp or 65k bund futures in risk terms
• July 24: Belgium to sell 0.2% 10/2023, 0.8% 06/2027, 1.60% 06/2047 for total EU2.2b-2.8b
• July 26: Italy I/L and CTZ sale
• July 28: Italy to sell bonds; expect new 5y, and 7y tap, alongside a CCT for up to EU8.5b, write Barclays in a note
• France to repay around EU36b in redemptions on July 26, though this may have already been invested due to T+2 settlement; Redemptions from Italy (EU22b) and Spain (EU20b) due in early August will be available for reinvestment late next week
• U.K. to sell GBP2.5b 1.5% 07/2027 UKT on July 25; equivalent to around 50k gilt futures; GBP3.17b in coupon payments are being returned to investors on July 24
• 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