BONDS: EGBs-GILTS CASH CLOSE: Core Curves Twist Steepen For The Week
Mar-14 18:06
Bunds weakened Friday, underperforming Gilts.
- A below-consensus UK GDP reading saw core FI get off on the front foot.
- Bunds led a sell-off off in early afternoon European trade after the Greens, CDU/CSU and SPD reached an agreement on proposed fiscal expansion (there was little net reaction after the German constitutional court later rejected opposition attempts to block debt brake reforms).
- However yields would close the gap, descending steadilyl for the remainder of the session headed into the cash close - no discernable trigger.
- The German curve bear steepened on the day, with the UK's shifting lower mostly in parallel (slight outperformance in the belly).
- For the week, the German curve twist steepened (2Y -6bp, 10Y +4bp); the UK's likewise but to a lesser extent (2Y -2bp, 10Y +3bp).
- OATs lagged a broader fall in periphery/semi-core spreads (in which BTPs/GGBs outperformed). Fitch is scheduled to review France's sovereign rating after hours, with some expectations of a downgrade (current rating: AA-; Outlook Negative).
- The UK dominates next week's European events calendar with both the BOE decision (likely on hold, 0bp change is priced) and labour market data due on Thursday.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.2bps at 2.185%, 5-Yr is up 1.6bps at 2.502%, 10-Yr is up 2.1bps at 2.876%, and 30-Yr is up 2.7bps at 3.202%.
- UK: The 2-Yr yield is down 1bps at 4.182%, 5-Yr is down 1.3bps at 4.287%, 10-Yr is down 1.1bps at 4.666%, and 30-Yr is down 1.2bps at 5.269%.
- Italian BTP spread down 2.5bps at 112.3bps / French OAT down 1.1bps at 69.2bps
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US TSYS/SUPPLY: Review 10Y Note Auction: Small Tail
Feb-12 18:04
- Treasury futures holding weaker after the $42B 10Y note auction (91282CMM0) tailed: drawing 4.632% high yield vs. 4.622% WI; 2.48x bid-to-cover vs. 2.53x prior.
- Peripheral stats indirect take-up climbs to 71.55% vs. 61.39% prior; direct bidder take-up 13.61% from 22.97% prior; primary dealer take-up 14.84% vs. 15.64% prior.
- The next 10Y auction (re-open) is tentatively scheduled for March 12.
FED: US TSY 10Y NOTE AUCTION: HIGH YLD 4.632%; ALLOTMENT 32.11%
Feb-12 18:02
- US TSY 10Y NOTE AUCTION: HIGH YLD 4.632%; ALLOTMENT 32.11%
- US TSY 10Y NOTE AUCTION: DEALERS TAKE 14.84% OF COMPETITIVES
- US TSY 10Y NOTE AUCTION: DIRECTS TAKE 13.61% OF COMPETITIVES
- US TSY 10Y NOTE AUCTION: INDIRECTS TAKE 71.55% OF COMPETITIVES
- US TSY 10Y AUCTION: BID/CVR 2.48
EURUSD TECHS: Hammer Candle Signals A Possible Reversal
Feb-12 18:00
- RES 4: 1.0630 High Dec 6
- RES 3: 1.0594 Dec 9 ‘24
- RES 2: 1.0533 High Jan 27 and a reversal trigger
- RES 1: 1.0427/42 50-day EMA / High Feb 5
- PRICE: 1.0375 @ 16:02 GMT Feb 12
- SUP 1: 1.0272/0141 Low Feb 4 / 3 and the bear trigger.,
- SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 4: 0.9947 76.4% of the Sep 28 ‘22 - Jul 18 ’23 bull leg
A short-term bull theme in EURUSD remains intact for now, reinforced by the rally off intraday lows. Attention is on the candle formation on Feb 3 - a hammer - that signals a possible reversal. However, additional reinforcing price evidence is required to signal a turn in the trend. MA studies remain in a bear-mode position, highlighting a dominant downtrend. 1.0427, the 50-day EMA, marks a key resistance. A clear break of it would be a bullish development. The bear trigger is 1.0141, the Feb 3 low.
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