EUROZONE ISSUANCE: EGB Supply
The EU, Italy, Finland, Greece, Germany, Spain, France and Ireland are all still due to issue this week while Slovakia and Belgium held auctions yesterday. We pencil in estimated gross issuance for the week at E43.3bln, up from E23.1bln last week.
- The EU will hold a syndication on Tuesday to launch a new 25-year Green EU-bond maturing February 2050. We have pencilled in a transaction size of E5-7bln (pre-announcement we had pencilled in E7bln but see some downside risks given the syndication is single-trance and green).
- Italy has also released a mandate to launch a new long 10-year BTPei maturing May 2036. We expect a transaction on Tuesday and pencil in an auction size of E4-5bln. We had noted the potential for a new 10-year BTPei launch in the coming weeks but this week is earlier than we had expected.
- Also Tuesday, Finland will look to hold an auction for up to a combined E1.5bln of the on-the-run 5/10-year RFGBs: the 2.875% Apr-29 RFGB (ISIN: FI4000557525) and the 3.00% Sep-33 RFGB (ISIN: FI4000550249).
- Germany will confirm its Q2 issuance calendar on Tuesday at 10:00GMT / 11:00CET.
- Ireland will also confirm what it is selling at Thursday's auction at 10:00GMT: We expect this 10-year 2.60% Oct-34 IGB (ISIN: IE000LQ7YWY4) to be reopened alongside another IGB at this auction.
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US: Biden To Deliver Remarks In Ohio Shortly
President Biden is shortly due to deliver remarks from the site of a Feb 3, 2023 train derailment which caused a major environment disaster in East Palestine, Ohio. LIVESTREAM
- Biden's slow response to the crisis was widely seen as contributing to a boost in former President Donald Trump's approval when Trump visited the site three weeks after the incident to highlight the admininstration's response.
- Trump wrote this week: “Biden should have gone there a long time ago. For him to go now is an insult to those who live and work in East Palestine.”
- The New York Times notes: "Mr. Biden, who promised to visit soon after the disaster, has faced criticism from Republicans and some residents for not going sooner. In a sign of how politically fraught the situation has become, Trump supporters planned a rally to coincide with Mr. Biden’s visit."
AUDUSD TECHS: Firmer Close Despite Bearish Trend Signals
- RES 4: 0.6900 High Jun 16 and a key resistance
- RES 3: 0.6871 High Dec 28 and the bull trigger
- RES 2: 0.6729/71 High Jan 12 / 3
- RES 1: 0.6546/6625 20-day EMA / High Jan 30 and key resistance
- PRICE: 0.6532 @ 16:31 GMT Feb 16
- SUP 1: 0.6443 Low Feb 13
- SUP 2: 0.6412 76.4% Fibonacci retracement for Oct - Dec upleg
- SUP 3: 0.6360 Low Nov 14
- SUP 4: 0.6339 Low Nov 10
AUD/USD posted a firm weekly and daily close Friday, rebuffing the bearish trend condition. The Latest bounce is still considered corrective at these levels, with Tuesday’s initial break lower reinforcing the bearish theme. To the downside, sights rest on 0.6412, a Fibonacci retracement. Moving average studies are in a bear-mode set-up, highlighting a clear downtrend. Key resistance to watch is 0.6625, the Jan 30 high. Initial resistance is at 0.6546, the 20-day EMA.
US TSYS: Tsys Weaker/Near Support After Strong PPI Print
- Treasury futures holding weaker after the bell - off lows after breaching technical support following this morning's higher than expected PPI.
- Headline final demand PPI printed at its highest SA monthly rate since August '23 in January, with the unrounded 0.33% M/M print easily overshooting the 0.1% M/M consensus (vs -0.15% prior after Wednesday's revisions).
- The core metrics overshot consensus by a larger margin. PPI ex-food and energy at 0.50% M/M (vs 0.1% cons, -0.06% prior) brings the 3mma annualized rate to 2.42% (vs 0.56% prior). Perhaps the one encouraging factor is the 6mma annualized rate, which still moderated a touch to 1.61% (vs 1.75% prior).
- Lower than expected: Housing Starts (1.331M, 1.460M est, prior up-revised to 1.562M from 1.460M) and Building Permits (1.470M vs. 1.512M est).
- Mar'24 10Y futures currently -14.5 at 109-23, after breaching initial technical support of 109-17 (50.0% of Oct 19 - Dec 27 climb) vs. 109-15 intraday low. Curves bear flatten: 2s10s -1.567 at -36.176, 10Y yield +.0669 at 4.2969%.
- Slow start to the week ahead, no data Monday for Presidents Day holiday (rates open for shortened hours on Globex). Tuesday: Philadelphia Fed Non-Manufacturing Activity and Leading Index (-0.1%, -0.3%). Treasury supply: $79B 13W, $70B 26W and $46B 52W bill auctions.
