CHINA RATES: China: Bond Wrap
- Following several days of higher yields, the bond market grabbed hold of the drop in aggregate financing and rallied hard throughout the day.
- The focus level for authorities of 2.20% in the 10 Yr was breached with ease today as bonds across the curve rallied 1-5bps
- Suggestions that market traders are finding ways to circumvent the crack down on government bond trading show the demand for bonds remains.
- Tomorrow sees significant data releases with both retail sales and industrial production providing further insight into the pace of slowdown in China.
2yr 1.592% (-1bp) 5yr 1.85% (-1.5bp) 10yr 2.16% (-4.5bp) 30yr 2.35% (-1.5bp)
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USDJPY TECHS: Trades Through Key Trendline Support
- RES 4: 163.93 2.0% 10-dma envelope
- RES 3: 163.36 2.00 proj of the May 3 - 14 - 16 price swing
- RES 2: 162.21 1.764 proj of the May 3 - 14 - 16 price swing
- RES 1: 159.75/161.95 20-day EMA / High Jul 3 and the bull trigger
- PRICE: 157.91 @ 06:25 BST Jul 15
- SUP 1: 157.38 Low Jul 12
- SUP 2: 156.83 38.2% retracement of the Dec 28 ‘23 - Jul 3 bull run
- SUP 3: 155.72 Low Jun 12
- SUP 4: 154.55 Low Jun 4
USDJPY traded sharply lower Thursday, and the pair remains soft. Price breached the 20-day EMA and exposed the next important support at 158.37, the trendline drawn from the Dec 28 low last year. The line has been pierced, a clear break of it would highlight a potential reversal. This would open 156.83, a Fibonacci retracement. For bulls, a reversal higher would refocus attention on key resistance and the bull trigger at 161.95, the Jul 3 high.
LOOK AHEAD: UK Timeline of Key Events (Times BST)
| Date | UK | Period | Event |
| 17-Jul | 0700 | June | CPI / PPI |
| 17-Jul | 1130 | - | King's Speech |
| 18-Jul | 0700 | May/June | Labour Market Survey |
| 19-Jul | 0001 | July | Gfk Monthly Consumer Confidence |
| 19-Jul | 0700 | June | Retail Sales / Public Sector Finances |
| 24-Jul | 0001 | July | Brightmine pay deals for whole economy |
| 24-Jul | 0930 | July | S&P Global Flash PMIs |
| 25-Jul | 1100 | July | CBI Industrial Trends |
| 29-Jul | 0930 | June | BOE M4 |
| 29-Jul | 0930 | June | BOE Lending to Individuals |
| 29-Jul | 1100 | July | CBI Distributive Trades |
| 30-Jul | 0001 | July | BRC Monthly Shop Price Index |
| 01-Aug | 0930 | July | S&P Global/ CIPS UK Final Manufacturing PMI |
| 01-Aug | 1200 | - | Bank Of England Interest Rate |
| 01-Aug | 1230 | - | BoE Press Conference |
| 05-Aug | 0930 | July | S&P Global/ CIPS UK Final Services/Composite PMI |
EUROSTOXX50 TECHS: (U4) Breaches Resistance
- RES 4: 5200.00 Round number resistance
- RES 3: 5151.00 High May 16 and the bull trigger
- RES 2: 5132.00 High Jun 6
- RES 1: 5087.00 High Jul 12
- PRICE: 5057.00 @ 06:04 BST Jul 15
- SUP 1: 4997.26 50-day EMA
- SUP 2: 4903.00/4860.00 Low Jul 2 / Low Jun 14 and the bear trigger
- SUP 3: 4846.00 Low Apr 19 and a key support
- SUP 4: 4800.00 Round number support
A bull cycle in Eurostoxx 50 futures remains intact and Friday’s gains reinforce the current condition. 5039.84, 61.8% of the May 16 - Jun 14 sell-off, has been cleared. This has resulted in a print above 5082.32, the 76.4% retracement. A clear break of it would be a positive development and suggest scope for an extension of the bull cycle that started Jun 14. This would open 5132.00, Jun 6 high. Initial support is 4997.26, the 50-day EMA.
