Halister News

(Bloomberg) -- Supply returns with an estimated EU17.5b in auctions scheduled, totalling ~EU14m/bp in risk terms, before drying up for the rest of the month as both Spain and Italy have now canceled their mid-August auctions as is common.

• Euro zone headline inflation is due on July 21; risks may be seen to the upside following stronger-than-expected German data on Friday
• BOE rate decision and August inflation report due on Thursday, with economists expecting rates to be held, with voting split 6-2. There are just three of the 47 surveyed -- including Nomura -- who forecast a rate increase
• Expect some focus on month-end duration extensions, which may support on Monday. Bloomberg Barclays index extension estimates show Eur Agg at 0.10y, and Sterling at 0.22y; 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 EU17.5b, equivalent to over EU14m/bp or 97k bund futures in risk terms
• Aug. 1: Germany to sell 0% 06/2019 for EUR4b
• Aug. 2: Germany to sell 0.5% 08/2027 for EU3b
• Aug. 3: Spain to sell 0.40% 04/2022, 5.9% 07/2026, 4.7% 07/2041 and I/L 2021; size estimated at 3b-4b
• Aug 3: France to sell 6% 10/2025, 1% 05/2027, 2% 05/2048 for EU5.5-6.5b
• There are no coupons eligible for reinvestment next week; redemptions worth EU42b from Italy and Spain are due to settle, though will likely have already been invested due to T+2 settlement
• U.K. to sell GBP2.25b 1.25% 07/2027 UKT on Aug. 1; equivalent to around 19k gilt futures; there are no coupons or redemption payments due
• NOTE: Auction calendar at ECO20 WE

To contact the reporter on this story: Stephen Spratt in London at sspratt3@bloomberg.net