EUR Swaps: PMIs beat consensus; More flattening

Prices chart 11 Oct 2021
Euro PMIs beat consensus although Bunds have been resilient. Meanwhile the swap curve has seen more flattening.

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  • PMIs beat consensus; More flattening
  • New issues


    PMIs beat consensus; More flattening
    Today’s session began with Euro Manufacturing and Services PMIs both coming in slightly stronger than consensus. The Euro Composite PMI printed at 47.8 vs 47.0 survey, up from 47.3 the previous month.

    In the market, the 10y Bund future lost up to 62 ticks but has since recovered and was last down just 10 ticks while the 10y Bund yield continues to hover around the 2% level. Speaking about the resilience of Bunds, one trader suggested there could be some position squaring, “It’s likely some are covering their shorts ahead of the long US weekend,” he suggested.

    Elsewhere, the front-end was described as less resilient as Euribors lost around 5.5bps while the Schatz faced selling pressure. “The Schatz is trading really poorly today - maybe it’s the PMI numbers,” suggested one trader.

    In sovereign supply, Germany’s DFA tapped €908m 30y bonds at an average yield of 1.94% vs 1.41% prior and bid to cover of 1.8 vs 2.1 prior. “There hasn’t been any strong flattening so it could be described as going smoothly,” said a trader.

    Elsewhere, euro new issuance continues to tick over and includes a couple of overseas borrowers as swap candidates, namely UK pharma GSK with a dual 5y and 10y tranche plus US insurer Liberty Mutual Group in the 8y sector.

    Across the euro swap curve, some sources highlighted ongoing receiving interest and flattening bias with 5s/10s last -2.5bp (-2.75bp) and 10s/30s at -53.25bp (-2bp).


    “The peak rate seems to be getting pushed higher in all countries, while the market seems to be thinking that growth will slow and inflation won’t persist - so we keep flattening.”


    New issues

  • Bank of Ireland is pricing €500m (max) 10.25y NC5.25 Tier 2 sub at swaps +415bps through BofA, HSBC, JPM, MS and UBS.

  • GSK Capital, a UK pharma, is pricing €500m 5y at swaps +35bps and €700m 10y at swaps +55bps. Led by BNPP (B&D), DB, JPM and Standard Chartered.

  • BFCM is pricing EUR long 10y at swaps +120bps through CIC, MS, Natixis and NatWest (B&D).

  • Liberty Mutual Group Inc, a US insurer, is pricing €500m 8y around swaps +225bps through BofA (B&D) and DB.

  • Continental AG is pricing €625m 5y around swaps +100bps through JPM (B&D), BNPP and NatWest.

  • Metso Outotec Oyj plans €300m 5y through Citi, Commerzbank, Nordea and SEB.

  • Bank of Valletta may sell €300m 5y NC4 SNP in the near future through CS and UBS.

  • OTP Bank is pricing €500m 3.25y NC2.25 around 7.375% through DB, Erste (B&D), JPM, OTP and UniCredit.