EU Mid-Session Update: UK Retail Sales result in more GBP buying

European equity markets trade close to flat levels, as much of the anticipation is on the Fed decision and press conference later in the session. Kingfisher is the notable out-performer following their better than expected trading update, while Thyssenkrupp also trade in the green, following agreeing a JV with Tata Steel.

Fixed Income

Bonos have been surprisingly calm ahead of the Catalonia independence referendum, where we saw earlier reports stating that the Spanish Police have arrested the Catalonian Jr Minister. 10y spreads to Bunds have been tighter by over 10bps to 111.3bps, from a wide of 123bps earlier this month. Much fixed income anticipation will be on the new German 30y Bund auction, with the bidding deadline set for 10.30am BST.

Gilts saw some bearish pressure following the stela Retail Sales report from the UK, falling 30 ticks as a reaction and printing fresh recent lows.


GBP was the outperformer early in the session, evident of the aforementioned strong Retail Sales report from the UK, printing the largest increase since April. Cable was pushed towards the week’s high around the 1.3619 area, finding some momentarily resistance around these levels. EUR/GBP bears also took advantage of the strong figures, reversing the failed attempt to attack yesterday’s high.

The latest New Zealand election poll sparked some early volatility on the futures open, with the seemingly market friendly, National Party regaining ground in the One News Poll (National Party 46% (+6%), vs. Labour 37% (-7%), vs. Green 8% (+1%)). AUD/NZD trades back inside the 2017 range and back below 1.1, a close below 0.9 could see the 1.1 – 1.03 2017 range once again become the trading pattern in the pair.


Oil markets have seen slow trade, with WTI’s attempt of a successful break of yesterday’s high failing, and now consolidating back in the post API range. Elsewhere, Saudi Aramco will be able to release its financial accounts in early 2018 if the government decides where they plan to list the oil giant, according to sources.

20 Sep 2017 - 09:48- Fixed IncomeResearch Sheet- Source: RANsquawk

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