EUROZONE ISSUANCE: EGB Supply Daily

The ESM likely is holding a syndication today. Germany, Italy, and Finland are due to hold auctions during the remainder of the week. Austria has already held a syndication, while the EU, Belgium, and Italy already held auctions earlier this week. We pencil in issuance of E28.9bln for the week, up from E22.8bln last week.

For the full MNI EGB Supply Daily with a recap of issuance so far this week and a look ahead to the next two weeks of issuance, click here.

• A syndicated transaction of the ESM is expected to price today after they sent out a mandate to bookrunners CACIB (DM/B&D), Deutsche Bank and JP Morgan yesterday following a request for proposal last week. IOIs were already taken yesterday. They will sell USD2bln WNG of a new 5-Year Sep-30 ESM-Bond. The transaction comes ahead of a USD3bln redemption for the ESM in September. That line also had a 5-year maturity initially. We had flagged an ESM/EFSF transaction as likely in late August (although we thought EFSF was more likely).
• Germany will come to the market today, reviving the 7-year Bund through the launch of its new 2.50% Nov-32 Bund (ISIN: DE000BU27014) as issuance demands have increased in H2.
• Italy will return to the market on tomorrow with a 5/10-year BTP / CCTeu auction. On offer will be E2.00-2.75bln of the on-the-run 5-year 2.70% Oct-30 BTP (ISIN: IT0005654642), E1.00-1.25bln of the 3.65% Aug-35 BTP (ISIN: IT0005631590), E1.75-2.00bln of the on-the-run 10-year 3.60% Oct-35 BTP (ISIN: IT0005648149) and E1.50-2.00bln of the 1.05% Apr-34 CCTeu (ISIN: IT0005652828).
• Finally, Finland will hold an ORI operation tomorrow, with up to E0.4bln on offer. Details of the RFGBs on offer will be released today. 

NOMINAL FLOWS: This week sees no redemptions (as was the case last week). Coupon payments for the week total E0.6bln, of which E0.5bln are Italian. This leaves estimated net flows for the week at a positive E28.3bln, up from E22.6bln last week.

• RES 4: 0.8769 High Jul 28 and the bull trigger   
• RES 3: 0.8744 High Aug 7 
• RES 2: 0.8682 High Aug 8  
• RES 1: 0.8674 High Aug 25 
• PRICE: 0.8636 @ 06:45 BST Aug 27
• SUP 1: 0.8597 Low Aug 14 
• SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg 
• SUP 3: 0.8540 Low Jun 30 
• SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg

Short-term gains in EURGBP are considered corrective - for now. A stronger recovery would refocus attention on the bull trigger at 0.8769, the Jul 28 high. On the downside, note that recent weakness resulted in a breach of key support at 0.8611, the Jul 31 low. The cross has also pierced the 50-day EMA, at 0.8622. A clear breach of these supports would highlight a stronger bear reversal. This would open 0.8562, a Fibonacci retracement point.

Large CAC Option Block trade last night:

• CAC (21st Nov) 7400/7200ps, bought for 40.15 in 11k (circa €850mln Notional).