BONDS: EGBs-GILTS CASH CLOSE: Bear Steepening Confirmed For The Week
Nov-07 17:17
European yields rose again Friday, capping a bear-steepening move for the week as a whole.
- Core bonds gained strongly in morning trade as global equities hit the weakest levels of the month so far.
- Despite a lack of a US nonfarm payrolls report due to government shutdown, bonds would reverse lower in the middle of the European afternoon session.
- This reversal was not really triggered by any particular macro / headline trigger, but rather order-related selling flows that saw curves bear steepen.
- For the week, both the German (2Y yield +2.2bp, 10Y +3.3bp) and UK (2Y +2.7bp, 10Y +5.7bp) bear steepened, with Gilts underperforming despite what had been perceived as a dovish-vs-expectations BOE meeting.
- Periphery/semi-core EGB spreads widened slightly, mirroring the continued pullback in equities.
- Next week's calendar highlight is UK labour market data, with various other data including German ZEW.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.3bps at 1.99%, 5-Yr is up 0.9bps at 2.256%, 10-Yr is up 1.6bps at 2.666%, and 30-Yr is up 2.8bps at 3.266%.
- UK: The 2-Yr yield is up 1.2bps at 3.798%, 5-Yr is up 3.1bps at 3.928%, 10-Yr is up 3.3bps at 4.466%, and 30-Yr is up 3.2bps at 5.25%.
- Italian BTP spread up 0.5bps at 76.7bps / French OAT up 0.3bps at 79.7bps
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US TSYS/SUPPLY: Review 10Y Auction Re-Open
Oct-08 17:04
- Treasury futures holding narrow range (TYZ5 +.5 at 112-22, yld 4.1171%) after the $39B 10Y note auction re-open (91282CNT4) tailed: drawing 4.117% high yield vs. 4.112% WI; 2.45x bid-to-cover vs. 2.65x prior.
- Peripheral stats: indirect take-up retreats to 66.80% vs. 83.13% prior; direct bidder take-up rebounds to 24.1% from 12.66% prior; primary dealer take-up 9.09% vs. 4.21% prior.
- The next 10Y auction is tentatively scheduled for November 12.
FED: US TSY 9Y-10M NOTE AUCTION: HIGH YLD 4.117%; ALLOTMENT 78.38%
Oct-08 17:02
- US TSY 9Y-10M NOTE AUCTION: HIGH YLD 4.117%; ALLOTMENT 78.38%
- US TSY 9Y-10M NOTE AUCTION: DEALERS TAKE 9.09% OF COMPETITIVES
- US TSY 9Y-10M NOTE AUCTION: DIRECTS TAKE 24.10% OF COMPETITIVES
- US TSY 9Y-10M NOTE AUCTION: INDIRECTS TAKE 66.80% OF COMPETITIVES
- US TSY 9Y-10M AUCTION: BID/CVR 2.48
EURUSD TECHS: Corrective Cycle Extends
Oct-08 17:00
- RES 4: 1.1919 High Sep 17 and a bull trigger
- RES 3: 1.1820 High Sep 23
- RES 2: 1.1779 High Oct 1 and a key short-term resistance
- RES 1: 1.1723 20-day EMA
- PRICE: 1.1615 @ 16:18 BST Oct 8
- SUP 1: 1.1606 Low Oct 8
- SUP 2: 1.1574 Low Aug 27
- SUP 3: 1.1516 76.4% retracement of the Aug 1 - Sep 17 bull leg
- SUP 4: 1.1392 Low Aug 1 and bear trigger.
EURUSD is trading lower as the current corrective cycle extends. This week’s move down has resulted in a breach of the 50-day EMA, and support at 1.1646, the Sep 25 low. The move paves the way for an extension towards 1.1574, the Aug 27 low. Note that moving average studies are in a bull-mode position highlighting a dominant medium-term uptrend. Initial firm resistance is 1.1779, the Oct 1 high. A break of this level would signal a bull reversal.
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