EUROZONE ISSUANCE: EGB Supply
Spain and France are both due to hold auctions this morning while Germany, Croatia and Austria have already come to the market this week. We pencil in estimated gross issuance for the week at E36.4bln, up from E26.3bln last week but without the large redemptions and coupons.
- Spain will look to hold a Bono/Obli/OBliEi auction this morning with E5.5-6.5bln of nominals and E250-750mln of the ObliEi on offer. The on-the-run 5-year 3.50% May-29 Bono (ISIN: ES0000012M51), the 0.50% Oct-31 Obli (ISIN: ES0000012I32), the on-the-run 10-year 3.25% Apr-34 Obli (ISIN: ES0000012M85) will be sold alongside the 2.05% Nov-39 Obli-Ei (ISIN: ES0000012M69).
- France will look to conclude issuance for the week, also this morning, with a LT OAT auction with another E11.5-13.0bln target range (the same as in February but a step up from 2023 norms). On offer will be the on-the-run 10-year 3.50% Nov-33 OAT (ISIN: FR001400L834), the 1.25% May-34 OAT (ISIN: FR0013313582), the 1.25% May-38 OAT (ISIN: FR0014009O62) and the 3.25% May-45 OAT (ISIN: FR0011461037).
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EURJPY TECHS: Short-Term Bear Threat Remains Present
- RES 4: 163.72 High Nov 27
- RES 3: 162.25 High Nov 29
- RES 2: 160.97/161.86 High Jan 25 / 19 and the bull trigger
- RES 1: 160.34 High Jan 30
- PRICE: 159.58 @ 06:45 GMT Feb 6
- SUP 1: 158.08 Low Feb 1 and a key near-term support
- SUP 2: 157.21 Low Jan 9
- SUP 3: 156.08 Low Jan 4
- SUP 4: 155.08 Low Jan 2
The current corrective bear cycle in EURJPY remains in play and this highlights potential for an extension lower. The cross has recently traded below the 20- and 50-day EMAs - a bearish development. A break of 158.08, Feb 1 low, would resume bearish pressure and open 157.21, Jan 9 low. For bulls, a stronger reversal would refocus attention on 161.86, the Jan 19 high and bull trigger. A break of this level would reinstate the recent bullish theme.
EUROZONE T-BILL ISSUANCE: W/C February 5, 2024
Spain, Belgium, the ESM, the EU and Italy are still due to sell bills this week, while Germany, the Netherlands, and France came to the market yesterday. We expect issuance to be E29.3bln in first round operations, up from E15.1bln last week.
- This morning, Spain will look to sell a combined E4.5-5.5bln of the 6-month/12-month letras: the 6-month Aug 9, 2024 letras and the new 12-month Feb 5, 2025 letras.
- Also this morning, Belgium will look to sell a combined E1.8-2.0bln of Short/Long TCs: An indicative E800mln of the 3-month May 9, 2024 TC and an indicative E1.2bln of the11-month Jan 9, 2025 TC.
- Also today, the ESM will look to sell up to E1.1bln of the new 3-month May 9, 2024 bills.
- Tomorrow, the EU will look to issue up to E1.0bln of the 3-month May 10, 2024 EU-bill and up to E1.5bln of the new 6-month Aug 9, 2024 EU-bill.
- Finally on Friday, Italy will look to sell the 12-month BOT, with details to be confirmed later today.
BTP TECHS: (H4) Support Remains Exposed
- RES 4: 122.63 High Dec 7 2022 (cont)
- RES 3: 122.18 3.00 proj of the Nov 10 - 17 - 24 price swing
- RES 2: 121.43 2.764 proj of the Nov 10 - 17 - 24 price swing
- RES 1: 119.27/77 High Jan 30 / 4
- PRICE: 117.41 @ Close Feb 5
- SUP 1: 116.98 Low Jan 25 and the bear trigger
- SUP 2: 115.70 Low Dec 8
- SUP 3: 114.10 50.0% retracement of the Oct 19 - Dec 27 bull cycle
- SUP 4: 113.31 Low Nov 28
BTP futures remain below last week’s high of 119.27 on Jan 30. The contract has recently traded above the 20-day EMA and pierced the Jan 12 high of 119.23. A clear break above 119.23 would highlight a base and a potential resumption of the primary uptrend. For now, attention is on key support at 116.98, the Jan 25 low. Clearance of this level would confirm a resumption of the recent bearish cycle and open 115.70, the Dec 8 low.
