29/08/2014

For all intents and purposes Russia has invaded Ukraine. As if we needed any reason to buy Bunds already!
Overnight US 10s are unchanged as they look for bunds for directional lead just now. So 71ish open in bunds striking target for new hi's early doors.
Daily bund chart

I don't see any reason to go short until we see a parabolic panic buying spree. That's said the current Geopolitical drive has also meant that bunds are starting to outperform European peripheral bonds. So if the Russia/Ukraine issue doesn't intensify there could be value in fading this rally against BTP's or OAT's. Any ECB extra stimulus in the near future is likely to encourage tightening in those spreads.

BTP-Bund 30min

 

OAT-Bund 30min

 

€ curve

 

Schatz/Bobl spread appears uninterested and range bound as the Flight to quality long end grab continues. Maybe both of these have found satisfactory yield levels until tightening policy appears on the horizon.

 

€ ted

 

 

 

All eyes on EUR CPI this morning

 

Good luck

L

 

28/08/2014

Good morning,

Steady continuation of the theme going on all day yesterday. Bull flattening in the European curve as the market positions for new stimulus package from Draghi.
The afternoon did see minor respite when sources suggested that ECB action was unlikely to come next week, outcome depends on August inflation data. Roll on tomorrow CPI!
Before then we have an abundance of European data to contend with this morning.

€ curve

I think its still a case of trend is your friend (data dependant) coming into  month end extension and another long weekend upon us odds of a turn in the curve are slim.

Click here for a full list of the economic data
http://www.fxstreet.com/economic-calendar/

Bund 30min

 

Tya 30min

Up 3.5 since Eurex close so anticipate bunds opening around 151.38.

 

€teds

 

 

 

 

Good luck

L

 

 

 

27/08/2014

US tens have drifted off of lows overnight so I expect bunds to open around the 151.00 area, which means we wont be far from this weeks 151.09 hi.
Off the Eurex open is Gfk Consumer confidence and EUR import price index. Nothing too market impacting...Confidence is not high and there is growing sentiment that extra EUR stimulus is on the way.
After the bank holiday stop ups in European fixed income yesterday saw a minor consolidation. I expect we will see any downside brief and shallow this week as we prepare for the summer to end and get back to real volumes and activity for September.
Big question for us is - How will Draghi's asset purchase plan work???

EU curve. Only one direction(sorry)

Large stops in Schatz on Monday could have given you an opportunity to sell 2s5s...Its the one curve trade not on all time lows as Bobl appears to lack the upwards vigour of bunds and Schatz. In general tho I see these curves only continue to flatten. Although BTP's and OAT's
 may offer better value than bunds to buy.
 BTP-BUND spread

Teds
In keeping with strong stuimulus view the teds to continue to look strong. Look for stops in the bonds to give value in buying ted dips.....That said Euribor trading is drying up not much 2 way flow. So patience will be important.

Good luck
L