ENERGY: ENI Raises 2025 Output Guidance

• The dollar’s supportive tone continues to dominate currency markets on Wednesday, as markets digest the latest U.S. & Russia comments surrounding Ukraine. GBPUSD has reverted lower in sympathy, currently probing initial trendline support (drawn from the Aug 01 low) at 1.3458. Clearance of this line would strengthen a bearish threat and target a move towards key support which resides at 1.3333, the Sep 3 low.
• As a reminder, flash PMIs for September disappointed expectations on Tuesday, adding to the building negative sentiment following last week’s public sector net borrowing data and associated concerns around the upcoming budget.
• Goldman Sachs believe vulnerabilities in the UK labour market, the need for further fiscal consolidations, global cyclical risks and a challenging structural valuation picture still point to a gradual drift higher in EUR/GBP from here.
• The latest recovery for the cross paves the way for an extension towards the bull trigger at 0.8769, the Jul 28 high. Clearance of this level would strengthen the bullish theme.

Source: Bloomberg Finance L.P. / MNI

The previously flagged block seller in BTP futures factors into some weakness in wider core global FI markets in recent trade.

• It comes after the latest political headwinds in France, in the form fresh trade union action on October 2, reaffirmed the difficulties that PM Lecornu continues to face. The French news resulted in some EGB/Bund widening before the Italian flow crossed.
• Elsewhere, we have noted that the latest headline flow surrounding the Italian working age could put pressure on public finances and worsen Italy’s existing demographic problems (see our recent run of BTP bullets for more colour there).
• Headlines surrounding Oracle’s ~$15bn 7-part issuance probably a factor as well.
• 10-Year BTP/Bund spread now out to ~82bp on the day, after BTP bulls failed to force the spread through ’10 lows at ~76bp in recent weeks (spread ~2bp wider on the session). 10-Year OAT/Bunds ~0.5bp above that level.

• Date $MM Issuer (Priced *, Launch #)
  • 09/24 $Benchmark Oracle 7pt: 5Y +105a, 5Y SOFR, 7Y +120a, 10Y +135a, 20Y +145a, 30Y +155a, 40Y +165a (note: Oracle issued $7.75B over six tranches on January 30: $1.5B +3Y +57, $500M +3Y SOFR+76, $1.25B 7Y +87, $1.75B +10Y +97, $1.75B +30Y +122, $1B +40Y +135)
  • 09/24 $3.65B NRG Energy 8.25NC3, 10.25NC5
  • 09/24 $1.5B CDP 5Y +68
  • 09/24 $Benchmark Nissan Motor Acceptance 3Y 6%a, 5Y 6.5%a
• $16.2B Priced Tuesday, $37B/wk