Belgium is due to come to the market tomorrow while the EU, the Netherlands, Italy, Germany and Greece have already come to the market this week. We pencil in gross nominal issuance of E31.3bln from scheduled issuance operations this week, almost double last week’s E16.8bln.
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Bobl futures extended recent weakness on Tuesday to hit fresh YTD lows at 114.730. The break lower confirms a resumption of the current bear cycle and maintains the bearish price sequence of lower lows and lower highs. Moving average studies are in a bear mode position and this highlights current sentiment. Sights are on 114.511, a Fibonacci projection. Initial firm resistance to watch is 116.351, the 20-day EMA.
Regional equities received a shot in the arm from the stronger than expected China PMI prints. Most of the benefit has been seen in terms of HK and China related shares, but most major indices are tracking higher at this stage. US futures are away from worst levels, with Eminis back to around flat.
Bund futures remain in a downtrend and the contract traded lower Tuesday. This has resulted in a test of the 132.60 key support. the Jan 2 low. A clear breach of this level would confirm a resumption of the broader downtrend and open the 132.00 handle next ahead of 131.80, support based on a MA envelope study. Initial firm resistance to watch is at 135.38, the 20-day EMA. Short-term gains would be considered corrective.