EUROZONE ISSUANCE: EGB Supply

May-16 05:51

The EU, Belgium and Latvia held syndications this week, while the Netherlands, Italy, Germany and Portugal held auctions. The EFSF has sent and RfP for an upcoming syndicated transaction (for next week). We pencil in estimated gross issuance for the week of E33.8bln, up from last week’s E31.8bln.

For the full document with a recap of issuance so far this week and a look ahead next week's of issuance, click here.

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UK DATA: Inflation data due at 7:00BST

Apr-16 05:49

The Bank of England forecast headline CPI at 2.71%Y/Y and the MNI median looks for a potential downside surprise here (2.62%Y/Y) while the Bloomberg consensus is broadly in line with the Bank’s forecast at 2.7%. With the exception of Deutsche Bank, all of the analyst previews we read look for headline CPI in a 2.6-2.7% range, however, with those forecasting to 2dp within the 2.60-2.70% range, too.
Looking broadly at the components, analysts expect a softer services print: the MNI median at 4.78%Y/Y is 0.15ppt below the BOE’s forecast at 4.93%Y/Y and this follows a 0.09ppt downside surprise to the BOE's forecast in February.
Within services, March sees rail fare increases with analysts not expecting any notable surprise in air fares (given Easter and the school holidays fell in April both this year and last year). Analysts are also generally expecting rental price increases to continue to soften while the ONS’s updated methodology for hotel prices is expected to both reduce volatility in the accommodation category and to reduce the probability of sharp increases. Generally it is expected that there are upside risks to all of these categories (as well as catering) as companies may have looked to increase prices slightly earlier than the employer NICs increase came into effect.
Core goods are expected to be 1.21%Y/Y based on the MNI median, close to the BOE’s 1.17%Y/Y forecast. There was a 0.14ppt downside surprise to the Bank's forecast in February which was largely attributed to a large downside surprise in clothing prices. There is expected to be some reversal in clothing – although analysts generally note they do not expect a full reversal with some noting that downside surprises to clothing prices have not been fully reversed in the past.
Energy prices are expected to come in below the Bank’s forecast due to petrol prices being soft (note that there are no notable changes to utilities prices). The analyst estimates that we have seen estimates a 7.8-8.0%Y/Y fall in energy prices.
Food prices remain a bit of a wildcard and have taken on more importance for the BOE recently (alongside core goods prices). Indeed, we think that the BOE is now more focused on the broader ex-energy CPI than on services CPI.

For the full MNI UK CPI Preview click here.

SCHATZ TECHS: (M5) Bullish Structure

Apr-16 05:47

RES 4: 107.812 0.618 proj of the Mar 6 - Apr 7 - 9 price swing
RES 3: 107.800 Round number resistance
RES 2: 107.775 High Apr 7 and the bull trigger
RES 1: 107.680 High Apr 9
PRICE: 107.525 @ 06:29 BST Apr 16
SUP 1: 107.190/106.965 20-day EMA / Low Apr 9 and key support
SUP 2: 106.830 Low Mar 27
SUP 3: 106.728 76.4% retracement of the Mar 6 - Apr 7 bull cycle
SUP 4: 106.630 Low Mar 18

Schatz futures are unchanged and the contract remains below last week’s high. For now, the recent pullback appears corrective and has allowed an overbought condition to unwind. The trend condition remains bullish - price has recently traded through a key resistance at 107.120, the Mar 4 high. The break highlights a stronger bull cycle and signals scope for a climb towards 107.800. Key support to watch lies at 106.965, the Apr 9 low.