EUROZONE ISSUANCE: EGB Supply
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.
- Today, Belgium will conclude issuance for the week with an ORI Facility operation for up to E500mln. On offer will be the 5.50% Mar-28 OLO (ISIN: BE0000291972) and the 5.00% Mar-35 OLO (ISIN: BE0000304130).
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BOBL TECHS: (H3) Fresh Cycle Low
- RES 4: 117.024 50-day EMA
- RES 3: 116.760 Low Feb 8
- RES 2: 116.351 20-day EMA
- RES 1: 115.520/850 High Feb 28 / 27
- PRICE: 115.040 @ 09:10 GMT Feb 28
- SUP 1: 114.730 Low Feb 28
- SUP 2: 114.511 2.236 proj of the Jan 19 - Jan 30 - Feb 2 price swing
- SUP 3: 114.239 2.382 proj of the Jan 19 - Jan 30 - Feb 2 price swing
- SUP 4: 114.020 2.50 proj of the Jan 19 - Jan 30 - Feb 2 price swing
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.
EQUITIES: China/HK Shares Surge On China PMI Beats
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.
- The HSI is up by 3.4% at this stage, with the high beta Tech sub-index +5% for the session so far. China mainland markets are seeing a more muted response, but the CSI 300 is still +1.50%. Northbound stock connect flows are positive, +6.5bn yuan, the first positive day of inflows since last Tuesday.
- The PMI beats point to stronger near term activity. This comes ahead of the upcoming People's Congress, which begins this weekend.
- Other markets have seen much more modest gains, with the Nikkei 225 +0.20% at this stage, while the ASX200 is around flat. Disappointing Q4 GDP data and concerns around slowed domestic spending weighing at the margins.
- Indian shares are higher, the Nifty +0.65% as it looks to move back above the 200-day MA.
BUND TECHS: (H3) Southbound
- RES 4: 136.40 50-day EMA
- RES 3: 136.00 Round number resistance
- RES 2: 135.15 20-day EMA
- RES 1: 133.61/134.36 High Feb 28 / 27
- PRICE: 132.60 @ 05:01 GMT Mar 1
- SUP 1: 132.06 Low Feb 28
- SUP 2: 132.00 Round number support
- SUP 3: 131.57 2.0% 10-dma envelope
- SUP 4: 131.16 2.00 proj of the Jan 19 - Jan 30 - Feb 2 price swing
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.
