EUROZONE ISSUANCE: EGB Supply

Slovakia, Germany and Italy are all due to hold auctions this week. There is also the potential for Austrian, Belgian and Finnish syndications in upcoming weeks, although the timing of these are more uncertain than usual given the recent market volatility. We look for estimated gross issuance for the week of E16.4bln, down from E34.0bln last week.

For more on the next two weeks of issuance and a review of last week's issuance see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.

• This morning, Slovakia will hold a SlovGB auction. On offer will be the 3.00% Feb-28 SlovGB (ISIN: SK4000024683), the 3.75% Mar-34 SlovGB (ISIN: SK4000024865), the 3.75% Feb-35 SlovGB (ISIN: SK4000022539) and the 2.00% Oct-47 SlovGB (ISIN: SK4120013400).
  • There will be no non-competitive auction of the 3.75% Mar-34 SlovGB and there is only E241.5mln available before the issue reaches its terminal size of E5.0bln. We would therefore expect as long as there are sufficient bids that the full E241.5mln is sold at this auction.
• Also today, Germany will sell E5bln of the new 1.70% Jun-27 Schatz (ISIN: DE000BU22098).
• Tomorrow, Germany will return to the market to issue E4bln of the 10-year 2.50% Feb-35 Bund (ISIN: DE000BU2Z049).
• To conclude the week, Italy will hold a BTP Short Term auction on Thursday. We expect a reopening of the 2.55% Feb-27 BTP Short Term (ISIN: IT0005633794). Details will be announced today (T-2 rather than the usual T-3 due to the public holiday).
  • Note that the BTPei line has been cancelled due to the syndicated launch of the May-56 BTPei via syndication.

NOMINAL FLOWS: The upcoming week April sees redemptions of E9.6bln, E9.1bln of which is from a formerly 4-year Austrian RAGB and E0.5bln is from a formerly 5-year Austrian fixed USD bond. Coupon payments for the week total E9.8bln of which E9.1bln are French and E0.4bln are Belgian. This leaves estimated net flows for the week at negative E2.9bln, versus positive E11.6bln last week.

• RES 4: 149.28 High Apr 3    
• RES 3: 148.03 50-day EMA 
• RES 2: 145.25 20-day EMA
• RES 1: 142.25/143.28 High Apr 21 / 16   
• PRICE: 139.99 @ 06:47 BST Apr 22
• SUP 1: 139.79 1.382 proj of the Feb 12 - Mar 11 - 28 price swing
• SUP 2: 138.82 1.500 proj of the Feb 12 - Mar 11 - 28 price swing
• SUP 3: 138.07  LowJul 28 ‘23
• SUP 4: 137.85 1.618 proj of the Feb 12 - Mar 11 - 28 price swing

The trend condition in USDJPY remains bearish and this week’s fresh cycle lows reinforce this condition. The extension down confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. Note too that moving average studies are in a bear-mode position highlighting a dominant downtrend. Sights are on 139.79 next, a Fibonacci projection. Initial firm resistance to watch is the 20-day EMA, at 145.25.

• 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: 107.700 Intraday high                   
• PRICE: 107.670 @ 06:24 BST Apr 22     
• SUP 1: 107.370 Low Apr 17  
• SUP 2: 107.259 20-day EMA    
• SUP 3: 107.125 Low Apr 10         
• SUP 4: 106.965 Low Apr 9 and a key support      

Schatz futures maintain a firmer tone and sights are on 107.775, the Apr 7 high and bull trigger. The recent pullback between Apr 7 - 9, appears corrective. Clearance of 107.775 would confirm a resumption of the uptrend and open 107.812, a Fibonacci projection. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Firm support to watch lies at 107.259, the 20-day EMA.