BUNDS: Block Trade

• STR usage was GBP98.162bln in today's operation. This is a GBP0.873bln increase relative to Thursday's operation and record take up. Note that this operation is a 16-day operation maturing on 8 January (to cover the year-end period). Bigger picture, it is broadly in line with recent usage (barring a dip to GBP93.1bln on 11 December).
• There is not ILTR operation this week. Gross takeup for last week's operation (which was the final of the year) was GBP2.493bln but there were two operations rolling off and this led to a GBP0.969bln net reduction - the largest net reduction since May 2023.
• Overall, this puts repo-led balances at GBP159.707bln, up from GBP155.657bln last week and a new record high but less than GBP1.0bln higher than seen two weeks ago (GBP158.826bln).

• In the equity space, the recent pullback in S&P E-Minis appears to have been a correction. A key short-term support has been defined at 6771.50, the Dec 18 low. A break of this level would signal scope for a deeper retracement of the recent bull phase between Nov 21 - Dec 11. This would open 6737.71, the 61.8% retracement of the Nov 21 - Dec 11 rally. For bulls a stronger resumption of gains would refocus attention on key resistance at 7014.00, the Oct 30 high.
• A bull cycle in EUROSTOXX 50 futures remains intact and the latest pullback appears to have been a correction. The first key support to watch lies at 5685.07, the 50-day EMA. A clear break of the EMA would highlight a potential short-term reversal. This would open 5622.00, the Nov 26 low. For bulls, sights are on key resistance at 5847.00, the Nov 13 high. The price pattern on Dec 18 is a bullish engulfing candle - a reversal signal.

Earlier on 23 Dec, French President Emmanuel Macron posted (in English) on X, "In Nuuk, I reaffirmed France’s unwavering support for the sovereignty and territorial integrity of Denmark and Greenland. Greenland belongs to its people. Denmark stands as its guarantor. I join my voice to that of Europeans in expressing our full solidarity." The French president's call for European solidarity comes amid a re-escalation in transatlantic tensions between the Trump administration and the gov't of Denmark over the future of Greenland. 

• US President Donald Trump's appointment of Louisiana Gov. Jeff Landry (R) as 'special envoy to Greenland' earlier in the week has sparked a firm backlash in Nuuk and Copenhagen, as well as several other European capitals, where national leaders have sought to reiterate their support for Denmark.
• Even the European Commission, which has historically stayed quiet on issues where the US president's ire may be raised, criticised the move.
• In October, Politico speculated on the potential method the White House would use to gain effective control of Greenland: "...the Danish government doesn’t expect a military invasion — it expects an invasion of dollars. Either as an outright offer to pay a large sum to each Greenlander, or a campaign to buy influence and local politicians."
• The renewal of the Greenland issue remains a risk to cooperation between NATO states, as well as the future of the US-EU joint statement on trade, with Trump having proved willing to threaten economic ruin via tariffs to secure concessions in other areas.