Halister News

(Bloomberg) -- EGB supply is set to turn light again next week, with double auction from Italy and Schatz sale equivalent to an estimated 40k bund futures in duration terms.

• Key data release for the week is preliminary euro-zone inflation report, with Italy, Germany, Spain and France due for release ahead of euro-area headline print on June 30
• In addition to auction supply, markets are still expecting a new 10y Spain syndicated sale in the near future; all recent Spanish 10y sales were announced Monday for Tuesday syndication
• Expect month-end duration extensions to come into focus next week as flows begin to emerge. Bloomberg Barclays forecast Euro Aggregate to extend by 0.08y, breakdown here; Citigroup also sees 0.08y for EGB index, with Italy (+0.14y) expected to benefit the most, country breakdown here
• SUPPLY/REDEMPTIONS: Auction supply may total EU12.25b, equivalent to around EU6m/bp or 40k bund futures in risk terms
  • June 27: Italy to sell I/L 0.1% 05/2022 for EU0.5-1b and 3.10% 09/2026 for EU0.5-1b
  • June 27: Germany to sell 0% 06/2019 for EU4b
  • June 30: Italy to sell bonds; expectations are for 5y and 10y BTP for EU5.25b, alongside EU2b in 7y CCTeu
  • There are EU9.4b in redemptions due from Belgium, which can be reinvested from Monday, given T+2 settlement
• U.K. to sell 0.125% I/L 03/2026 for GBP1b on June 27; 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 Anil Varma