EUROZONE ISSUANCE: EGB Supply
Spain, France and Belgium are still due to issue this week while Italy and Germany have already come to the market. We pencil in gross nominal issuance of E29.9bln, up from E21.1bln last week.
- Spain will look to hold a Bono / Obli auction this morning with E4.5-5.5bln of nominals on offer alongside E250-750mln of an Obli-Ei. On offer will be the on-the-run 5-year 3.50% May-29 Bono (ISIN: ES0000012M51), the off-the-run 0.70% Apr-32 Obli (ISIN: ES0000012K20), the on-the-run 30-year 1.90% Oct-52 Obli (ISIN: ES0000012K46) and the 0.70% Nov-33 Obli-Ei (ISIN: ES0000012C12).
- France will then come to the market to hold a LT OAT auction with on-the-run 10/30/50-year OATs on offer alongside the 20-year Green OAT for a total of E9.5-11.0bln: the 3.50% Nov-33 OAT (ISIN: FR001400L834), the 3.00% May-54 OAT (ISIN: FR001400FTH3), the 0.50% May-72 OAT (ISIN: FR0014001NN8) and the 0.50% Jun-44 Green OAT (ISIN: FR0014002JM6).
- Belgium will complete issuance for the week tomorrow with an ORI operation. Up to E500mln of off-the-run OLOs is likely to be on offer. The bonds on offer will be announced this afternoon.
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STIR: Light Bid On SONIA Strip
The aforementioned moves in Bunds & Euribor will be providing some support for the SONIA strip in pre-gilt trade.
- That leaves SONIA futures running 0.5-3.0bp richer through the blues.
- Local news flow has seen the BRC shop price inflation metric fall to the lowest Y/Y level seen since September ’22 (6.2%), in what was the fourth consecutive monthly moderation. This may be providing some light support in the background.
- The local data docket is empty for the remainder of the day.
AUDUSD TECHS: Range Breakout
- RES 4: 0.6630 High Aug 2
- RES 3: 0.6616 High Aug 16
- RES 2: 0.6522 High Aug 30 and Sep 1, and the key resistance
- RES 1: 0.6422/6501 20-day EMA / High Sep 29
- PRICE: 0.6318 @ 07:42 BST Oct 3
- SUP 1: 0.6306 Intraday low
- SUP 2: 0.6287 2.00 proj of the Jun 16 - Jun 29 - Jul 13 price swing
- SUP 3: 0.6272 Low Nov 3 2022 and a key support
- SUP 4: 0.6215 2.236 proj of the Jun 16 - Jun 29 - Jul 13 price swing
The AUDUSD started the week on a bearish note and the pair is trading lower today. Support at 0.6331, the Sep 27 low and bear trigger, has been breached. This highlights a range breakout and confirms a resumption of the downtrend that started early February. The move lower signals scope for an extension towards 0.6287 next, a Fibonacci projection. On the upside, key trend resistance is at 0.6522, the Aug 30 and Sep 1 high.
RBNZ: MNI RBNZ Preview - October 2023: Prolonged Pause, Watch Inflation Risks
- The RBNZ is highly likely to keep rates at 5.5% at its October 4 meeting, which is inline with a unanimous consensus. Given the upcoming election and key data and forecasts following October’s meeting, the RBNZ is unlikely to change the tone of its comments significantly this month or hint at possible forecast revisions. It will probably reiterate its higher for longer monetary policy view while retaining its neutral stance.
- Q3 CPI data is published on October 17 and inflation expectations on November 8. These are always important inputs into RBNZ decision making but this quarter they will be watched closely for signs of second-round effects from higher fuel prices, which would be a significant issue given that core inflation is yet to turn down. Thus there is uncertainty surrounding the outcome of the November 29 meeting.
- See full preview here.
