EUROZONE ISSUANCE: EGB Supply – W/C 10 November (2/2)
Nov-14 15:59
- Spain will look to hold a Bono/Obli auction on Thursday. The auction size will be confirmed on Monday 17 November. On offer will be the on-the-run 3.00% Jan-33 Obli (ISIN: ES0000012P74), the on-the-run 10-year 3.20% Oct-35 Obli (ISIN: ES0000012P33) and the on-the-run 30-year 4.00% Oct-54 Obli (ISIN: ES0000012M93).
- France will then come to the market, also on Thursday, to hold an MT OAT auction. On offer will be a combined E10.0-12.0bln of the on-the-run short 3-year 2.40% Sep-28 OAT (ISIN: FR001400XLW2), the on-the-run 5-year 2.70% Feb-31 OAT (ISIN: FR001400Z2L7), the 1.50% May-31 OAT (ISIN: FR0012993103) and the 3.50% Nov-33 OAT (ISIN: FR001400L834)
- France will return later on Thursday to conclude issuance for the week with an IL OAT auction. On offer will be E0.5-1.0bln combined of the 0.10% Jul-36 OATei (ISIN: FR0013327491), the 1.80% Jul-40 OATei (ISIN: FR0010447367) and the 0.10% Jul-53 OATei (ISIN: FR0014008181)
- Cancelled auction: The PDMA will not hold its auction originally scheduled for Wednesday and has confirmed that it has completed bond issuance for 2025.
NOMINAL FLOWS: The week ahead will see redemptions of E18.7bln, largely from a formerly 7-year BTP. Coupon payments for the week total E4.6bln of which E3.3bln are Italian and E1.2bln German. This leaves estimated net flows for the week at positive E5.1bln, down from positive E12.6bln this week.
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US 10YR FUTURE TECHS: (Z5) Sights Are On The Bull Trigger
Oct-15 15:50
- RES 4: 114-10 High Apr 7 (cont.)
- RES 3: 114-00 Round number resistance
- RES 2: 113-29 High Sep 11 and the bull trigger
- RES 1: 113-17+ High Oct 14
- PRICE: 113-13+ @ 16:45 BST Oct 15
- SUP 1: 112-26 20-day EMA
- SUP 2: 112-16/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg
- SUP 3: 111-26 Low Aug 26
- SUP 4: 111-13+ Low Aug 18 and a key support
Treasuries are holding on to this week’s gains and a bullish theme remains intact. Last Friday’s climb resulted in a break of the 113-00 handle, signalling scope for stronger rally towards 113-29, the Sep 11 high and a bull trigger. Clearance of this hurdle would confirm a resumption of the M/T uptrend. Support at the 50-day EMA at 112-16 remains intact for now. A clear break of the average would expose 111-13+, the Aug 18 low and a key support.
FOREX: USD Index Weaker Again, Despite Bessent Optimism
Oct-15 15:44
- The USD Index started the session weaker and generally maintained those losses through the London close. Powell's relative easing bias late on Tuesday provided the initial trigger, but the much firmer-than-expected CNY fix from the PBOC also worked against the greenback.
- An appearance at the IMF / World Bank forum helped trigger a brief spell of USD support. Bessent's optimism on growth, laying out the groundwork for US growth akin to the "late 1800's or 1990's" is helping the USD higher at the margins and pressing EURUSD toward flat (thereby erasing the ~40 pip gains at the European open). The better-than-expected Empire Manufacturing print will also be helping.
- US 10y yields finding a base at 4.00% has proved a key catalyst, although markets have looked through the persistent S/T uptrend in equities across Wednesday.
- Focus for the duration of the Thursday session turns to the Australian jobs print for September, expected to show employment change of +20k in the month with an unchanged participation rate. AUD had a quieter Wednesday session, despite Treasury Secretary Bessent talking up the possibility of a longer rare earths trade truce with China. This keeps the near-term picture unchanged after Tuesday's new cycle low. However, Tuesday’s recovery highlights a possible reversal pattern - a hammer candle formation. If correct, it signals the end of the bear leg that started Sep 17.
- UK data are also in focus Thursday - with GDP stats as well as industrial and manufacturing production. Ahead of the Thursday print, a late rally in GBP saw GBP/USD rally back to 1.34 on decent volumes. While there was no specific UK newsflow or headlines to drive the move, it helped EURGBP drift into the London finish, closing the gap with the French pension reform-tied rally from earlier in the week.
TARIFFS: Brazil And US To Hold Trade Negotiations In Washington On Thursday
Oct-15 15:39
Reuters reports that Brazilian President Luiz Inácio Lula da Silva said Brazil and the US will hold “negotiation talks on tariffs on Thursday.” Reuters notes, “Brazilian Foreign Minister Mauro Vieira and United States State Secretary Marco Rubio agreed last week on a meeting between teams from both countries in Washington to discuss trade.”
- Following a 30-minute call last week, Lula and US President Donald Trump agreed to meet in person “soon,” and exchanged phone numbers “to establish direct communication,” according to a Brazilian readout.
- The talks come amid a thaw in Trump’s rhetoric toward Brasilia since a brief meeting between the two leaders at the UN General Assembly last month. But a 50% US tariff on Brazilian goods remains in place, with Brazil looking to reroute exports.
- Jorge Viana, head of the Brazilian Trade and Investment Promotion Agency, said in an interview: “Perhaps the biggest increase in trade flows we’ll see, regardless of the tariff hike, but also because of it, will be with India.”
- Bloomberg reported today that, responding to Trump's tariffs, Brazil and India are looking to “forge new relationships and triple their $12 billion trade partnership.” A Brazilian delegation in India this week, “is likely to discuss potential partnerships with Indian business leaders in areas including agribusiness, biofuels and defense.”
- Bloomberg notes, “While both [Indian PM] Modi and Lula are maneuvering to improve their standing in Washington, they’re also effectively hedging their economic bets to cope with being squeezed by Trump.”
