EU CREDIT UPDATE: EU Market Open
- 2y/10y bunds closed flat/-3bp at 1.91%/2.55%. USTs closed flat/-2bp at 3.46%/3.96%.
- Main/XO ended -0.4bp/-2bp at 55.6bp/267bp€IG -0.3bp at 0.8% (Corps -0.4bp at 0.77%, Fins -0.2bp at 0.84%). $IG +0.6bp at 0.78% (Corps +0.7bp at 0.77%, Fins +0.5bp at 0.79%).
- SX5E/SPX futures closed flat at 5700pts/6773pts. €IG movers included Edenred SE (+20%), General Motors Co (+15%), Aliaxis (+10%), RTX (+8%), Albemarle (-5%).
- SX5E/SPX futures are -0.4%/+0.1% this morning. After news that the meeting between the US’ Rubio and Russia’s Lavrov was being postponed, talks between Presidents Trump and Putin will now not take place in the “immediate future” as Russia won’t accept holding the frontline in Ukraine where it currently is.
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USDJPY TECHS: Holding On To Its Latest Gains
- RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 3: 150.92 High Aug 1 and a key resistance
- RES 2: 149.64 76.4% retracement of the Aug 1 - Sep 17 bear leg
- RES 1: 148.38/149.14 Intraday high / High Sep 3
- PRICE: 148.27 @ 06:58 BST Sep 22
- SUP 1: 146.77/145.49 Low Sep 18 / 17 and a pivot support
- SUP 2: 145.40 50% retracement of the Apr - Aug upleg
- SUP 3: 144.10 61.8% retracement of the Apr - Aug upleg
- SUP 4: 143.45 Low Jul 3
USDJPY recovered sharply from last Wednesday’s low and the pair is holding onto its latest gains. A bullish candle pattern on Sep 17 - a hammer formation - provided an early reversal signal. Last Wednesday, the pair breached a number of important short-term support levels, however, this has not confirmed a bearish threat. A continuation higher would open 149.14, the Sep 3 high. Pivot support is 145.49, the Sep 17 low.
EUROSTOXX50 TECHS: (Z5) Bullish Outlook
- RES 4: 5600.00 Round number resistance
- RES 3: 5558.30 0.764 proj of the Aug 1 - 22 - Sep 2 price swing
- RES 2: 5525.00 High Aug 22 and a bull trigger
- RES 1: 5505.00 High Sep 19
- PRICE: 5476.00 @ 06:35 BST Sep 19
- SUP 1: 5405.03/5366.00 20-day EMA / Low Sep 17
- SUP 2: 5302.00 Low Sep 2 and a key short-term support
- SUP 3: 5262.18 76.4% retracement of the Aug 1 - 22 bull leg
- SUP 4: 5181.00 Low Aug 1 and key support
Eurostoxx 50 futures recently traded through resistance around the 20-day EMA - a bullish development - and the subsequent rally reinforces a bullish theme. The move signals potential for a climb towards 5525.00, the Aug 22 high and a bull trigger. On the downside, key support has been defined at 5302.00, the Sep 2 low. Clearance of this level is required to reinstate a bearish theme.
EUROZONE ISSUANCE: EGB Supply – W/C 22 September (2/2)
- Italy will look to hold a BTP Short Term / BTPei auction on Wednesday with E2.0-2.5bln of the on-the-run 2.10% Aug-27 BTP Short Term (ISIN: IT0005657330), E1.00-1.25bln of the 1.10% Aug-31 BTPei (ISIN: IT0005657348) and E1.00-1.25bln of the 2.40% May-39 BTPei (ISIN: IT0005547812) on offer.
- Germany will return to the market on Wednesday with E4bln of the 7-year 2.50% Nov-32 Bund (ISIN: DE000BU27014) on offer.
- Italy will conclude issuance for the month on Friday with a 5/10-year BTP / CCTeu auction. Details will be confirmed on Tuesday. We expect the 2.70% Oct-30 BTP (ISIN: IT0005654642) to be on offer alongside a final reopening of the 3.60% Oct-35 BTP (ISIN: IT0005648149). However, there is a chance that a new 10-year BTP is launched, and also a good chance that there is an off-the-run 10-year BTP on offer alongside the 3.60% Oct-35 BTP. The Apr-34 CCTeu has been on offer at every auction since its launch in May.
NOMINAL FLOWS: The upcoming week will see redemptions of E7.1bln, E6.0bln from a formerly 10-year ESM bond and E1.1bln from a formerly 10-year LATVIA bond. Coupon payments for the week total E3.0bln of which E2.8bln are French. This leaves estimated net flows for the week at a positive E24.9bln versus negative E17.9bln last week.
