EUROZONE ISSUANCE: EGB Supply
The EU and Italy both released updated funding plans on Monday (summarised below). Finland and Lithuania held syndications this week, whilst the EU, Italy and Germany held conventional auctions. Italy will return to the market today. We pencil in an estimated gross issuance for the week at E26.3bln, down from E32.8bln last week.
- Italy will return to the market today, to hold a 5/10-year BTP / CCTeu auction. On offer will be E3.0-3.5bln of the on-the-run 5-year 3.35% Jul-29 BTP (ISIN: IT0005584849), E3.0-3.5bln of the on-the-run 10-year 3.85% Jul-34 BTP (ISIN: IT0005584856) and E1.25-1.75bln of the Apr-32 CCTeu (ISIN: IT0005594467). We had thought there was a risk of a new 10-year BTP being launched at this auction, but we think that will now happen in July.
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BTP TECHS: (M4) Support Remains Intact For Now
- RES 4: 120.28 High Mar 14 and the bull rally
- RES 3: 119.55 High Mar 27
- RES 2: 119.10 High Apr 10 and a key near-term resistance
- RES 1: 118.21/119.00 High May 21 / 16
- PRICE: 117.73 @ Close May 27
- SUP 1: 116.93/30 Low May 24 / Low Apr 26
- SUP 2: 115.76 Low Apr 25 and the bear trigger
- SUP 3: 115.70 Low Dec 8 ‘23 (cont)
- SUP 4: 114.74 1.236 proj of the Dec 27 - Feb 22 - Mar 14 price swing
BTP futures traded higher on May 15 and breached 118.61, the May 6 high. This exposed a more important resistance at 119.10, the Apr 10 high, that remains intact for now. Clearance of it would strengthen a bullish theme and open the key resistance at 120.28, the Mar 14 high. The contract has pulled back recently and this has exposed support at 116.94, the May 15 low. It was pierced last Friday, a clear break of it would be a bearish development.
EURJPY TECHS: Approaching Key Resistance
- RES 4: 172.89 2.0% 10-dma envelope
- RES 3: 192.00 Round number resistance
- RES 2: 171.56 High Apr 29 and the bull trigger
- RES 1: 170.65 0.618 proj of the May 3 - 15 - 16 price swing
- PRICE: 170.51 @ 06:44 BST May 28
- SUP 1: 168.42 20-day EMA
- SUP 2: 166.51 Trendline support drawn from the Dec 7 ‘23 low
- SUP 3: 166.37 50-day EMA
- SUP 4: 164.02 Low May 3
EURJPY maintains a firmer short-term tone and is holding on to its recent gains. The medium-term trend structure is bullish and sights are on 171.56, the Apr 29 high and key resistance. Initial support lies at the 20-day EMA, at 168.42, and remains intact. Key trendline support drawn from the Dec 7 ‘23 low, is at 166.51. A clear breach of this line would instead highlight a stronger reversal and initially expose support at the 50-day EMA, at 166.37.
EUROZONE T-BILL ISSUANCE: W/C May 27, 2024
Germany and France have already sold bills this week, while Greece and Italy are due to come to the market on Wednesday. We expect issuance to be E18.9bln in first round operations, up from E16.8bln this week.
- On Wednesday, Greece will look to come to the market with E500mln of the new 26-week Nov 29, 2024 GTB.
- Also on Wednesday, Italy will look to sell E6bln of the new 6-month Nov 29, 2024 BOT.
For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.
