HALISTER1: Spanish Linker, Finland Supply Ahead; Mizuho Says Add Flatteners

Spanish Linker, Finland Supply Ahead; Mizuho Says Add Flatteners

(Bloomberg) -- Core bonds open slightly lower, reflecting yesterday’s late sell-off in Treasuries, as U.S. stocks powered to new highs. Bunds remain capped below 0.40% level. Supply ahead from Spain, Finland and U.K.
  • Spain mandated banks for new 10y linker, expected to come to market today. Spain’s inaugural 10y linker sold in May 2014 saw EU5b issued
  • Finland to sell 0% 04/2022 and 1.375% 04/2047 bonds for up to EU1.5b at 11am London
    • Danske Bank looks for RFGBs to continue to outperform core after the French election first round; recommends buying 5y vs DSL, while 30y tap offers good opportunity to buy long semi-core duration
  • U.K. to sell 0.125% I/L 2046 for GBP800m at 10:30am London
  • Steepening of 10s30s yesterday, supported by the large EFSF supply, brings the opportunity to scale into flatteners, Mizuho’s Peter Chatwell writes in a client note. Especially as ECB will tone down its dovish language and depress inflation expectations in the coming months
  • NOTE: Excel heat map of euro-area govt bond curves and spreads here
YIELDS:
  • German 10Y yield +1bp at 0.38%; June bund futures -15 ticks to 160.83
  • Italy 10-year +2bps at 2.29%, Spain +2bps to 1.69%, France steady at 0.90%
  • For overnight news and what to watch, see EU FX/Rates daybook

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Peter Chatwell (Mizuho Financial Group Inc)

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