CREDIT PRE-MARKET: EUR Market Wrap
- 2y/10y bunds closed -2bp/-4bp at 2.07%/2.26% - closing near intraday richest levels with the latest pullback in crude oil and equity futures providing cross-market support with no obvious headline trigger noted. German PMIs were stronger than consensus, though the underlying details were still weak while the French PMI was weaker than expected and the rest of the Eurozone once again outperformed
- Main/XO ended -0.3bp/-1bp at 57.5bp/310bp while €IG was -0.6bp at 1.03% (Corps -0.7bp at 0.97%, Fins -0.5bp at 1.11%, €HY +3bp at 3.33%). Gaming was once again the weakest sub-index at +3.8bp with Flutter the only constituent – Packaging and Gaming are the only sectors wider WoW vs. -2.4bp for €IG. $IG was +0.1bp at 0.83% (Corps +0.1bp at 0.83%, Fins +0.1bp at 0.85%, $HY flat at 2.89%).
- SXXP/SPX ended flat/+0.2% at 519pts/5810pts. €IG's biggest risers/fallers included Whirlpool Corp (+11%), Sodexo SA (+6%), United Parcel Service Inc (+5), Edenred SE (-15%), Carrier Global Corp (-9%), Michelin (-8%), Harley-Davidson Inc (-7%).
- SX5E/SPX futures are -0.4%/flat a very uneventful session for USTs, with futures edging slightly higher throughout the session. China and Hong Kong equities are higher, but this isn't benefiting broader risk appetite.
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EURJPY TECHS: Recovery Exposes Resistance At The 50-Day EMA
- RES 4: 163.89 High Aug a5 and a reversal trigger
- RES 3: 162.89 High Sep 2 and a key resistance
- RES 2: 161.70 50-day EMA
- RES 1: 161.19 High Sep 23
- PRICE: 160.41 @ 06:43 BST Sep 25
- SUP 1: 157.05/155.15 Low Sep 18 / Low Sep 16
- SUP 2: 154.42 Low Aug 5 and the bear trigger
- SUP 3: 154.00 Round number support
- SUP 4: 153.87 Low Dec 14 ‘23
A bear cycle in EURJPY remains intact and the latest recovery is considered corrective - for now. Moving average studies are in a bear-mode position and this continues to highlight a dominant downtrend. The 20-day EMA has been breached and this signals scope for a stronger recovery near-term, towards 161.70, the 50-day EMA and an important area of resistance. A reversal lower would refocus attention on the key support at 154.42, the Aug 5 low.
EUROZONE T-BILL ISSUANCE: W/C September 23, 2024
Greece and Italy are both due to sell bills this week, whilst Germany, France and Austria already issued this week. We expect issuance to be E21.5bln in first round operations, up from E17.8bln last week.
- Today, Greece, will issue E500mln of the new 26-week Mar 28, 2025 GTB.
- Finally tomorrow, Italy will end the week by selling E7bln of the new 6-month Mar 31, 2025 BOT.
For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.
CHINA: Bond Wrap.
- A day after a raft of policy initiatives the PBOC announced a cut in the Medium-Term Lending Facility (“MLF”) in a bid to boost lending.
- The MLF was reduced to 2.0% from 2.3% and CNY300bn was injected into the financial system as part of the operation.
- The positivity continued for equities with CSI 300 +2.1%, Shanghai Comp +1.7% and Shenzhen Comp +2.30%
- Bonds were quiet today with little to no movement ahead of next weeks holidays.
2yr 1.415% 5yr 1.730% 10yr 2.052% 30yr 2.188%
