EQUITIES: Estoxx call spread
May-19 09:42
SX5E (16th June) 4500/4600cs 1x3, bought for 6.2 in 5k (5k x15k)
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BONDS: Gilts bear flatten following UK inflation data
Apr-19 09:39
- The upside surprise to UK inflation (including core inflation) this morning has been the driving force for markets so far today. Gilts have been the underperformers with the curve bear flattening as markets fully price a 25bp May hike (from 22.5bp yesterday) and two further 25bp hikes by the Autumn (cumulative 77bp priced by September up from 61bp yesterday and 52bp Monday). This has pushed 2-year gilt yields over 20bp higher since Monday's close and 10-year gilt yields around 15bp higher.
- UST and Bund curves have also bear flattened with more being priced in for the Fed and ECB on the back of the UK inflation data too.
- Looking ahead we have some ECB speakers due today (Lane, Knot, de Cos, Schnabel) and we will receive the Fed's Beige Book.
- TY1 futures are down -0-12+ today at 114-03 with 10y UST yields up 4.1bp at 3.619% and 2y yields up 6.7bp at 4.267%.
- Bund futures are down -0.53 today at 133.43 with 10y Bund yields up 3.3bp at 2.507% and Schatz yields up 5.0bp at 2.947%.
- Gilt futures are down -1.03 today at 100.19 with 10y yields up 7.9bp at 3.822% and 2y yields up 12.0bp at 3.793%.
OUTLOOK: Price Signal Summary - S&P E-Minis Trend Condition Remains Bullish
Apr-19 09:38
- In the equity space, the current trend condition in S&P E-Minis is remains bullish. Tuesday’s gains reinforce current conditions - the contract traded to a fresh cycle high. Sights are on 4205.50, the Feb 16 high ahead of 4244.00, the Feb 2 high and a key medium-term resistance. Firm support lies at 4073.75, the 50-day EMA. Initial support to watch lies at 4113.07, the 20-day EMA. Short-term pullbacks are considered corrective.
- EUROSTOXX 50 futures remain in an uptrend. Recent gains have reinforced the bullish significance of the break of 4268.00, the Mar 6 high and a former key resistance. The break confirmed a resumption of the trend and maintains the bullish price sequence of higher highs and higher lows. Sights are on 4381.50, the Jan 5 2022 high (cont). Initial firm support lies at 4240.60, the 20-day EMA.
GERMAN AUCTION RESULTS: Strong 10-year Bund auction
Apr-19 09:37
- That was a strong 10-year Bund auction with a higher volume of bids than the 22 March auction despite the smaller auction size today (leading to a very healthy bid-to-cover).
- At the time of writing we are trading below the average/low price acheived at auction.
