BONDS: Gilt/Bunds Narrows After Highest Close Since '22
Nov-07 11:16
Today’s gilt outperformance vs. Bunds is almost entirely driven by spill over from the extension of the German swap spread tightening and increased political risk premium surrounding Germany.
- 10-Year gilt/Bunds remains within the multi-year range, with the September ’22 Truss Budget highs intact, last ~205bp.
- The October ’22 closing high was breached yesterday, before today's fade back below.
Fig. 1: 10-Year Gilt/Bunds (bp)
Source: MNI - Market News/Bloomberg
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OUTLOOK: Price Signal Summary - Bear Cycle In Gilts Still In Play
Oct-08 11:11
- In the FI space, Bund futures are trading just above Monday’s low. The latest bearish reversal has resulted in a move through both the 20- and 50-day EMAs and undermines a recent bullish outlook. Price traded lower again, Monday and a continuation would further strengthen a developing bearish threat. This would open 132.65, the Sep 2 low. Initial resistance is at 134.48, the 20-day EMA. A clear break of this average is required to signal a possible reversal.
- A bear threat in Gilt futures remains present. Friday’s impulsive sell-off, and Monday’s move lower, reinforces this theme. The contract has traded through support at 98.11, the Sep 2 low and a bear trigger. The break strengthens the downtrend, signalling scope for a deeper retracement, towards 96.23, a 1.00 projection of the Sep 17 - 30 - Oct 1 price swing, and 96.00. Initial firm resistance has been defined at 99.47, the Oct 1 high and just above the 20-day EMA. First resistance is 96.93, Monday’s high.
EQUITIES: MNI US EARNINGS SCHEDULE - Banks Take Early Focus
Oct-08 11:05
- Earnings season informally begins today with Pepsi's midweek report, before BlackRock, Wells Fargo and JP Morgan on Friday.
- Unfortunately for net interest margins, the Fed's first rate cut since the pandemic will have come too late in the quarter to provide any material relief for banks - leaving initial focus on FICC revenues and general cost reduction.
- Just over half of the S&P 500 by market cap will have reported by the end of October – although significant releases still cross through November, with NVIDIA scheduled for 21st November.
Full schedule for the quarter including timings, EPS & revenue expectations here: https://mni.marketnews.com/4eVW8tG
OAT: Looking to test next support
Oct-08 11:00
- French 10yr OAT has now also joined the BTP to hover at its intraday low, Investor will look at 125.45, the September low for support.
While in Yield, the September high is situated at 3.066%.
- 3.066% = 125.38.
- 3.100% = 125.06.
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