EUROZONE ISSUANCE: EGB Supply
Spain, France and Belgium all still look to issue this week while Germany came to the market yesterday. We pencil in gross nominal issuance of E18.0bln, down from E24.0bln last week.
- This morning, Spain will look to hold an Obli/ObliEi auction (E5-6bln of nominals and E250-750mln linker). On offer will be the 1.50% Apr-27 Obli (ISIN: ES00000128P8), the 0.60% Oct-29 Obli (ISIN: ES0000012F43) and the on-the-run 10-year 3.55% Oct-33 Obli (ISIN: ES0000012L78) alongside the 0.65% Nov-27 Obli-Ei (ISIN: ES00000128S2).
- Also this morning, France will come to the market to hold a LT OAT auction. As we expected, the auction size of E8-9bln is a bit smaller than we have seen recently (France typically reduces its auction sizes in August), although it’s not as much of a reduction as has been seen in other years. On offer will be the on-the-run 10-year 3.00% May-33 OAT (ISIN: FR001400H7V7), the on-the-run 15-year 1.25% May-38 OAT (ISIN: FR0014009O62) and the 37-year 4.00% Apr-60 OAT (ISIN: FR0010870956).
- Tomorrow, Belgium will hold an ORI operation. We look for the usual up to E500mln size with off-the-run OLOs likely to be on offer. Details will be announced this afternoon.
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BTP TECHS: (U3) Watching Support
- RES 4: 118.41 1.00 projection of May 26 - Jun 2 - Jun 8 price swing
- RES 3: 118.18 High Feb 2 (cont)
- RES 2: 118.00 Round number resistance
- RES 1: 117.10/60 High Jun 29 / 26 and the bull trigger
- PRICE: 115.50 @ Close Jul 3
- SUP 1: 115.30/114.61 Low Jun 16 / Low Jun 15
- SUP 2: 113.83 Low Jun 8 and key support
- SUP 3: 112.48 Low May 29
- SUP 4: 111.78 Low May 26 and a key support
BTP futures traded to a fresh cycle high last week and price has recently breached resistance at 117.16, the Jun 16 high and a short-term bull trigger. This does represent a bullish development and a continuation higher would open the 118.00 handle next. However, the most recent pullback threatens the bullish theme and attention is on support at 114.61, the Jun 15 low. Clearance of this level would highlight a possible reversal.
EURJPY TECHS: Bulls Remain In The Driver's Seat
- RES 4: 159.99 2.0% 10-dma envelope
- RES 3: 159.92 2.236 proj of the May 11 - 29 - 31 price swing
- RES 2: 158.72 2.00 proj of the May 11 - 29 - 31 price swing
- RES 1: 158.00 High Jun 28
- PRICE: 157.61 @ 06:45 BST Jul 4
- SUP 1: 155.06/154.88 154.05 Low Jun 23 / 20-day EMA
- SUP 2: 154.05 Low Jun 20
- SUP 3: 153.09 Low Jun 16
- SUP 4: 151.67 50-day EMA
EURJPY is unchanged and maintains a bullish tone as the cross consolidates at its recent highs. Last week’s price action reinforces a bullish theme and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting positive market sentiment. The focus is on 158.72, a Fibonacci projection. Initial key support is at 155.06, the Jun 23 low.
EUROZONE T-BILL ISSUANCE: W/C July 3, 2023
Spain, Belgium, Greece and the EU still look to sell bills this week while Germany, the Netherlands and France, came to the market yesterday. We look for issuance at first round operations of E24.4bln, up from last week's E18.8bln.
- This morning, Spain will look to sell E4.5-5.5bln 6/12-month letras: 6-month Jan 12, 2024 letras and new 12-month Jul 5, 2024 letras.
- Belgium will then come to the market with a combined E1.8-2.2bln of the 2-month Nov 9, 2023 TC and the 6-month Jan 11, 2024 TC on offer (E1bln indicative for each).
- Tomorrow, Greece will look to sell E625mln of the new 13-week Oct 6, 2023 GTB.
- The EU will wrap up bill issuance for the week tomorrow with up to E1.0bln of the 3-month Oct 6, 2023 EU-bill and up to E1.5bln of the new 6-month Jan 12, 2024 EU-bill on offer.
