Look to tomorrow: More supply

Discussion in 'Index Futures' started by dfuller33, Feb 13, 2008.

  1. Look to tomorrow: More supply- Eur 3 bn BTP 4.25% Oct 12s at 10.00GMT and GBP 2 bn4.50% 2042s at 10.30GMT.

    * BTP October 2012 - This bond continues to trade at an elevated spread versus the Bobl. Analysts' think that the yield differential, currently at 28bp, should gradually tighten as the ECB turns more accommodative. Desks' also like the bond on a fly versus the BTP Feb 2012 and Feb 2013. They expect one more tap of this security.
    * UKT December 2042 - The recent steepening of the sterling yield curve should support the auction. The bond itself starts to look attractive versus surrounding maturities. Desks' expect the auction to go well with a bid-to-cover ratio around 1.9.

    As for data, Germany’s Q4 GDP flash estimate, which is expected to show growth of 0.2% q-o-q (sa), sharply down from 0.7% in Q3 and a little lower than the ¼% rate indicated initially by the statisticians when the preliminary 2007 national accounts were published. They expect French GDP growth to have eased to a mere 0.3% in Q4, down from 0.8% in Q3- BUT skewed to the downside. All-in-all, flash estimate of aggregate euro-area GDP is likely to reveal growth of 0.3% q-o-q (sa), well below the 0.8% rate achieved in Q3. UBS REPORTS before the mkt opens.