The full calendar of scheduled meetings for the ECB is outlined below. Bear in mind that it is theoretically possible, in extraordinary times, for the ECB to hold extra, emergency meetings on top of this schedule.
ITC - EGB, Gilt and UST Month End Extensions
ECB Tiering - Any Drift in money rates?
German swap spreads - Long/Short end diverge
Main Highlights: - EU Tusk: I’ve received signals from Dublin a deal is possible. - EU’s Barnier given green light to enter “tunnel negotiations” - Draghi: More fiscal policy needed to help ECB to boost growth
USTs: At 13:00ET/18:00BST, the Treasury will auction $24bn re-opened 1.625% 8/15/2029s General Views: This week’s supply has been complicated by the looming US/China trade talks and the numerous headlines related to the negotiations. This backdrop may underpin demand for safe assets but makes set-up more difficult and may limit participation at the margin
Portugal (Baa3/BBB/BBB) has seen its bonds do extremely well on a relative and absolute basis in 2019, helped by a strong credit story such that the spreads to Spain, which is currently rated 1-2 notches better (Baa1/A/A-), with much better market liquidity. Only above 10y do Portuguese bonds really trade cheaper.
Main Highlights: - China narrows scope of US trade talks - BBG - German Aug factory orders contract 0.6% m/m vs -0.3% exp - Greece to tap 10y, UK DMO looks at and then dismisses long dated Gilt tender this week
Below is a chart of 10y Bund-OAT spreads over the past 10 days. There is a dominant theme that the spread has tended to narrow in the morning. Hints that there is a consistent buyer. Not always the case and yesterday was a small exception (supply)
Japanese investors hit Treasuries cash register – temporarily – into end-Sep fiscal half-year end