BONDS: EGBs-GILTS CASH CLOSE: Gilt Curve Flattens As BOE Mulls QT
Jul-09 19:00
The multi-session rise in yields took a breather Wednesday, with Gitls outperforming Bunds.
- Yields dipped slightly at the open, picking up through the morning in contained fashion as market participants digested overnight tariff rate announcements from the US.
- But the rally proved short lived, with German and UK supply and upside in equities and oil prices capping gains.
- The Gilt curve edged flatter as BoE Governor Bailey reaffirmed the idea that the recent curve steepening will factor into the BoE's decision on QT.
- US Treasuries led a modest rally through the afternoon, as President Trump renewed calls to call for the Federal Reserve to cut rates.
- 10Y instruments remained confined within the prior session's ranges throughout. The UK curve twist flattened, with the German curve leaning bull steeper.
- Periphery/semi-core EGB spreads widened slightly, with OATs underperforming.
- Thursday's calendar includes varying industrial production data and final June inflation for some Eurozone countries, with appearances by ECB's Cipollone, Escriva, and Villeroy, and BOE's Breeden scheduled.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.2bps at 1.86%, 5-Yr is down 1.5bps at 2.239%, 10-Yr is down 1.4bps at 2.673%, and 30-Yr is down 1bps at 3.162%.
- UK: The 2-Yr yield is up 0.8bps at 3.88%, 5-Yr is down 0.1bps at 4.041%, 10-Yr is down 2.1bps at 4.612%, and 30-Yr is down 3.2bps at 5.422%.
- Italian BTP spread up 0.1bps at 85.1bps / French OAT up 1bps at 68.8bps
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EURJPY TECHS: Pierces An Important Resistance
Jun-09 19:00
- RES 4: 166.92 2.0% 10-dma envelope
- RES 3: 166.69 High Oct 31 2024 and a key resistance
- RES 2: 166.10 High Nov 6 ‘24
- RES 1: 165.29 High May 13 and bull trigger
- PRICE: 164.98 @ 16:03 BST Jun 9
- SUP 1: 163.43 20-day EMA
- SUP 2: 162.76 50-day EMA
- SUP 3: 161.78 Low May 26
- SUP 4: 161.09 Low May 23 and key support
The trend set-up in EURJPY remains bullish and last week’s gains reinforce current conditions. Friday’s gains resulted in a print above key resistance at 165.21, the May 13 high. A clear break of this hurdle would confirm a resumption of the uptrend and open 166.10, the Nov 6 2024 high. Key short-term support lies at 161.09, the May 23 low, where a break is required to highlight a stronger reversal and suggest scope for a deeper correction.
COMMODITIES: Crude Rises, Metals Gain As US-China Talks Begin
Jun-09 18:47
- Crude prices are higher today, as risk sentiment has remained supported by US-China trade talks in London.
- Ahead of the talks, President Trump authorised Treasury Secretary Bessent's team to negotiate away recent restrictions on the sale of a wide variety of technology and other products to China, according to people familiar with the matter.
- WTI Jul 25 is up by 1.2% at $65.4/bbl.
- WTI futures traded higher last week, resulting in a clear break of resistance around the 50-day EMA. The climb signals scope for an extension towards $65.82, the Apr 4 high, followed by $71.10, the Apr 2 high and key resistance.
- It is still possible that the recovery since early May is a correction, and support to watch lies at $59.74, the May 30 low.
- Meanwhile, spot gold has risen by 0.7% to $3,334/oz, amid a moderately weak US dollar.
- A bullish theme in gold remains intact and a continuation of gains would refocus attention on $3,435.6, the May 7 high.
- Elsewhere, copper has also rebounded by 1.4% to $492/lb, as the red metal remains supported by a drop in inventories and disruptions to supply.
- Copper futures breached resistance at $498.25, the Apr 23 high last week, undermining the recent bearish theme and signalling scope for an extension higher near-term. This has opened $509.85, a Fibonacci retracement.
- On the downside, a pivot support is seen at $474.84, the 50-day EMA
US TSY OPTIONS: Jul'25 10Y Put Buy
Jun-09 18:45
- +10,000 TYN5 108.5 puts, 3 vs. 110-04.5/0.05%
