EQUITY TECHS: E-MINI S&P: (U5) Corrective Pullback Extends

The combination of this morning’s 10-year supply alongside negative spillovers from US Treasuries has weighed on Bund futures, now -35 ticks at 130.14 (albeit off lows of 130.08). Futures remain above Monday’s low (130.00) for now, but a bearish threat is present and a clear move below prior support at 130.12 would highlight this threat, undermine the recent bullish theme, and signal scope for an extension lower. 

• Germany sold E6bln of the new 10-year 2.60% Aug-35 Bund this morning. Demand metrics were a bit softer than the last auction of the previous on-the-run line, but the reaction in Bund futures was contained.
• The German curve has bear steepened (note: 10-year yields are skewed higher owing to a BBG benchmark roll), with Schatz yields up 1bp and 30-year Bund yields up 3.5bps.
• 10-year EGB spreads to Bunds are biased a little wider, but remain within 1bp of yesterday’s closing levels. French PM Bayrou survived a no-confidence vote last night – as expected.
• This morning’s Eurozone data hasn’t been market moving. The Italian unemployment rate surprisingly jumped to 6.5% (vs an upwardly revised 6.1% prior), which also pushed the Eurozone-wide reading a tenth above consensus to 6.3%.
• Further commentary from the ECB’s Sintra forum will be eyed, particularly in relation to recent exchange rate moves. The MNI Policy Team released an interview with Bank of Portugal Governor Centeno this morning. 

{eu} SX5E (15th Aug) 5550/5700cs, bought for 15.5 in 4k.