EUROZONE T-BILL ISSUANCE: W/C June 27, 2022 - Recap

Greece and the EU are both still scheduled to sell bills today, Germany and France sold bills Monday for a combined E8.6bln. We look for total issuance from first round operations of E14.7bln, down from E18.6bln last week.

• On Monday morning, Germany sold of E3bln (E2.949bln allotted) of the 3-month Sep 21, 2022 bubill and E3.0bln (E2.372bln allotted) of the 9-month Mar 22, 2023 bubill.
• Monday afternoon, France sold up to E5.590bln of 13/20/50-week BTFs, the top of the target range: E3.194bln of the new 13-week Aug 31, 2022 BTF, E1.398bln of the 20-week Oct 19, 2022 BTF and E0.998bln of the 50-week May 17, 2023 BTF.
• Today, Greece will look to sell E625mln of the new 26-week Jun 1, 2022 GTB.
  
  
• Also today, the EU will look to complete bill issuance for the week with up to E1.0bln of the 3-month Sep 9, 2022 EU-bill and up to E1.5bln of the new 6-month Dec 9, 2022 EU-bill on offer.

Spill over from the U.S. Tsy space has seemingly applied some pressure to the super-long end of the JGB curve (30s and 40s), with twist steepening in play in the JGB space as the Fed gets set to implement its quantitative tightening program from today (some reaction to the cheapening of longer dated U.S. Tsys observed since the NY open is also feeding in). Remember that the BoJ has less relative control over the longer end of the JGB curve, which is likely promoting the twist steepening.

• Note that the 5- to 7-Year zone of the JGB curve outperformed, with the major JGB benchmarks running 1bp richer to 2bp cheaper across the curve. The outperformance in the belly was once again likely linked to BoJ control, given the continued presence of 10-Year JGB fixed rate operations to fortify the upper end of the Bank’s permitted 10-Year JGB yield trading range (10s last yield 0.24%, ~1bp off the upper limit of the aforementioned band). This allowed JGB futures to unwind their overnight losses and more, hitting the lunch bell +4 vs. yesterday’s settlement
• Domestic Q1 data was mixed, with capex disappointing and company profits beating.
• Commentary from Japanese PM Kishida re: his economic policy outlook failed to provide fresh impetus for the space, with no fresh information divulged.
• Elsewhere, BoJ Deputy Governor Wakatabe maintained his usual reflationist tone.
• 10-Year JGB supply headlines domestically on Thursday.

• RES 4: 0.8658 High Sep 29 2021
• RES 3: 0.8643 High Sep 30 2021
• RES 2: 0.8619 High May 12 and bull trigger
• RES 1: 0.8587 High May 24
• PRICE: 0.8515 @ 06:36 BST June 1
• SUP 1: 0.8488/8433 20-day EMA / Low May 23
• SUP 2: 0.8393/ 0.8391 Low May 17 / 61.8% of Apr 14 - May 12 upleg
• SUP 3: 0.8367 Low May 2
• SUP 4: 0.8337 76.4% retracement of the Apr 14 - May 12 upleg

EURGBP is unchanged and remains in consolidation mode. The recent break higher on May 24 reinstated a short-term bullish theme and this has exposed 0.8619, May 12 high and the next hurdle for bulls. Clearance of this level would resume a 3.5 month uptrend. Initial support lies at 0.8488, the 20-day EMA ahead of a firmer short-term level at 0.8433, May 23 low. Key short-term support is unchanged at 0.8393, the May 17 low and bear trigger.