GREECE T-BILL AUCTION RESULTS: 52-Week GTB

The 50-day EMA at 129.13 continues to limit downside in Bund futures, meaning the move down that started on Oct 17 is still considered corrective for now. A clear break of the 50-day EMA would signal scope for a deeper retracement towards 128.92 (61.8% retracement of the Sep 25 - Oct 17 bull leg).

• The EU will sell up to E6bln of 6/10/30-year EU-bonds at 1030GMT. Presence of this supply may be limiting recoveries in Bund futures this morning.
• German yields are up to 1bp higher across the curve, with a marginal bear flattening bias noted.
• With European equity futures up 0.6% on the session, 10-year EGB spreads to Bunds are up to 1bp narrower. French budget negotiations remain an area of focus for the OAT/Bund spread.
• Earlier comments suggest ECB’s Simkus has turned slightly less dovish in recent weeks. We had suspected this may be the case after his remarks on Friday were a little less supportive of a December cut than prior to the ECB’s October decision.
• The Eurozone October manufacturing PMI confirmed flash estimates at 50.0. France remains a point of sluggishness.
• ECB speak is due from Lane, Escriva and Kocher later today. The US calendar is headlined by the ISM manufacturing survey and Treasury Marketable Borrowing estimates ahead of Wednesday’s refunding announcement. 

• The Australian dollar trades a little firmer Monday, keeping a technical bull cycle in play for AUDUSD as Tuesday’s RBA decision looms. The Q3 trimmed mean CPI print at 3.0% y/y was at the top of the 2-3% target band, a “material miss” for the RBA, which reinforces the likelihood of rates being held at 3.6% tomorrow. Indeed, RBA-dated OIS pricing implies almost no chance of a cut, with just a 2% probability assigned.
• Updated staff forecasts will be released, and the underlying inflation path is likely to be the focus to see how far the convergence to the 2.5% mid-point has been pushed out. MNI’s preview of the meeting is here: https://mni.marketnews.com/47wR2lG
• Scope remains seen for an AUDUSD move back to 0.6629, the Sep 30 and Oct 1 highs. Clearance of this level would strengthen the bullish condition, moving the focus back to 0.6707, the Sep 17 high and bull trigger.
• Highlighting the bullish AUD theme, it is worth noting that AUDNZD has traded to a fresh cycle high of 1.1461 earlier today. Solid demand was found beneath 1.13 and the latest strength further narrows the gap towards the 2022 highs at 1.1491. A break of this level would place the cross at its highest point since 2013. NZ employment data is scheduled Wednesday local time.
• Elsewhere, ongoing strength for the major equity benchmarks, alongside the domestic narrative in Japan, continue to underpin the AUDJPY rally. The cross traded to fresh 11-month highs last Thursday above the 101 mark, of which a sustained break would place the focus on the US election related highs at 102.41.

The 10-year OAT/Bund spread remains stuck between 75-80bps with 2026 budget negotiations still ongoing. PM Lecornu has avoided censure from the Socialists for now, but divisions within the National Assembly on the budget remain evident. A move back towards 70bps is possible if confidence in passing a budget increases, but the fiscal implications of any concessions will be important to monitor.

• Lecornu is meeting with opposition leaders behind closed doors today try and build consensus outside of the National Assembly. Socialist Leader Faure has noted this morning that “just because we are not satisfied at the moment doesn’t mean there is no way forward,”….“The path is narrow, but it exists,”.
• The Social Security budget will start being debated in the National Assembly tomorrow. Le Parisien reports that the French Council of Auditors has warned that "the risk is higher in 2026, that the balance of social security schemes will, in practice, be even more deteriorated than anticipated".
• September government budget balance data will be released tomorrow morning.