EMERGING MARKETS: CEEMEA FX Price Signal Summary - EURPLN Bears Remain In The Driver’s Seat
Jun-21 10:49
- EURHUF has pulled back from last week’s high of 376.97 on Jun 15. The trend condition remains bearish and recent short-term gains are considered corrective. The next key resistance is at 378.79, the May 19 high. On the downside, key support and the bear trigger is 367.59, the Jun 12 low. A clear break would resume the downtrend and open 366.41, the Mar 30 2022 low and the 360.00 handle further out.
- EURPLN trend conditions remain bearish and the cross is trading closer to its recent lows. Last week’s fresh cycle low confirmed a resumption of the downtrend, extending the bearish price sequence of lower lows and lower highs. A continuation would open the 4.40 handle next. The 50-day EMA intersects at 4.5321. A break of this average would alter the picture. The 20-day EMA is the first resistance, at 4.4797.
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US TSYS: Slightly Richer With Further Debt Talks, Fedspeak Eyed
May-22 10:46
- Cash Tsys hold slightly richer after no clear progress in debt talks and the front end outperforming a touch after dovish Kashkari comments re looking towards skipping the June hike. Debt talk impasse continuation follows optimism building late last week before being dashed on Friday, and sees tense talks set for this week as cash balances start to look precarious. Biden and McCarthy are due to meet today, time unknown.
- 2YY -2.1bp at 4.245%, 5YY -2.1bp at 3.711%, 10YY -1.1bp at 3.661%, 30YY -0.8bp at 3.919%
- TYM3 trades 6+ ticks higher at 113-24+ but remains well within Friday’s range, with volumes at a low but recent average 235k. Resistance is seen at 114-05 (May 19 high) after which lies 114-27 (50-day EMA), whilst support sits at 113-08+ (Mar 15 low).
- Fedspeak headlines an otherwise bare docket, with non-current year voters Bullard (0830ET), Bostic & Barkin (1105ET) and Daly (1105ET).
- Bill issuance: US Tsy $57B 13W, $54B 26W Bill auctions (1130ET)
BONDS: Core Paper Off Best Levels, European Peripherals Get Most Of The Attention
May-22 10:40
Core bonds are happy to consolidate off best levels of the day, with European & U.S. equity index futures off their lows and U.S. regional lender PacWest showing higher pre-market after it announced the sale of a portfolio of real estate loans (albeit at a discount).
- That leaves U.S. Tsys bull steepening on the day, while Bunds & Gilts twist flatten.
- Greek paper remains the notable mover in the EGB space in the wake of the previously covered national election results, with the 10-Year Greek/German spread narrowing by the best part of 20bp (based of BBG generic yields), flirting with the 140bp mark as of typing. A quick reminder that the incumbent Greek ruling party outperformed pre-election polls. PM Mitsotakis has noted that he will not be looking to form a coalition as he looks to build on momentum via a second-round vote which could generate a mandate for his party to govern alone.
- Portuguese paper manages to benefit from the ratings outlook upgrade Portugal received from Moody’s on Friday.
- Meanwhile, the rally in Portuguese and Greek bonds is seemingly limiting any widening impetus in Spanish & Italian paper.
OUTLOOK: Price Signal Summary - Bear Cycle In Gilts Remains Intact
May-22 10:32
- In the FI space, Bund futures maintain a bearish theme following last week’s move lower. Support at 134.99, the May 10 low, was breached and this strengthened the bearish theme, paving the way for a continuation near-term. The focus is on key support at 133.10, the Apr 19 low. Key short-term resistance has been defined at 137.29, the May 11 high. Initial resistance is 135.32, the 20-day EMA.
- Last week’s sell-off in Gilt futures marked an acceleration of the bear cycle. The contract has cleared support at 99.73, the Apr 19 low, and 99.20, the Feb 28 low and a key support level. Note that price has also traded through the late Dec 2022 lows. This confirms a resumption of the downtrend and signals scope for weakness towards 97.00, the 2.00 projection of the May 3 - 10 - 11 price swing. Initial firm resistance is 99.73.
