EU CREDIT UPDATE: EUR Market Wrap
- Bunds closed 7-8bp wider with 2y/10y yields at 2.02%/2.2% - after US data took yields lower before a less dovish than expected ECB press conference moved yields wider. US inflation insight: https://media.marketnews.com/US_Inflation_Insight_Dec2024_5d3be22295.pdf.
- Main/XO ended +0.5bp/+3bp at 53.6bp/294bp while €IG was -0.8bp at 0.98% (Corps -0.8bp at 0.93%, Fins -0.8bp at 1.06%, €HY -5bp at 3.02%). Energy outperformed at -1.7bp while Media & Ent was the only subsector wider on the moves in WBD. $IG was +0.6bp at 0.75% (Corps +0.6bp at 0.75%, Fins +0.6bp at 0.75%, $HY -1bp at 2.58%).
- SXXP/SPX ended -0.1%/-0.5% at 519pts/6051pts. €IG's biggest movers included Warner Bros Discovery Inc (+15%), Lonza Group AG (+5%), BPER Banca SPA (+5%).
- SX5E/SPX futures are -0.2%/+0.1%. Overnight team flagged that UST yields have been steady though China and Hong Kong equities are softer, with property related indices down.
- Looking ahead, we have UK data headlined by monthly GDP. French CPI revisions are also due. In the US, only Nov trade prices are on tap.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EUROZONE ISSUANCE: EGB Supply
Italy, Germany and Portugal look to hold auctions today, whilst the Netherlands and Germany have already held auctions this week. We pencil in estimated gross issuance for the week at E20.7bln, down from E32.8bln last week.
- This morning, Italy will hold a 3/7/15-year BTP auction. On offer will be E3.5-4.0bln of the new 3-year 2.70% Oct-27 BTP (ISIN: IT0005622128), E1.25-1.50bln of the 3.50% Feb-31 BTP (ISIN: IT0005580094), E1.25-1.50bln of the 2.50% Dec-32 BTP (ISIN: IT0005494239) and E1.00-1.25bln of the on-the-run 15-year 4.15% Oct-39 BTP (ISIN: IT0005582421). Note that the 3.15% Nov-31 BTP that was recently launched via syndication will not be on offer.
- Also today, Germany will return to the market to sell E4bln of the 10-year 2.60% Aug-34 Bund (ISIN: DE000BU2Z031).
- Finally today, Portugal will hold an OT auction, to sell a combined E1.00-1.25bln of the on-the-run 10-year 2.875% Oct-34 OT (ISIN: PTOTESOE0021) and the 4.10% Feb-45 OT (ISIN: PTOTEBOE0020).
For more on this week's issuance and a look ahead to next week see the PDF here: EZ241113.pdf
GILT TECHS: (Z4) Corrective Cycle
- RES 4: 96.65 High Oct 30
- RES 3: 95.83 Low Oct 10
- RES 2: 95.00 20-day EMA
- RES 1: 94.73 High Nov 1
- PRICE: 93.82 @ Close Nov 12
- SUP 1: 92.53 Low Nov 6 and the bear trigger
- SUP 2: 92.23 2.236 proj of the Sep 17 - 30 - Oct 1 price swing
- SUP 3: 92.00 Round number support
- SUP 4: 91.75 2.3821 proj of the Sep 17 - 30 - Oct 1 price swing
The trend condition in Gilt futures is unchanged and remains bearish. Short-term gains are considered corrective. The contract has recently breached 92.99, a 2.00 projection of the Sep 17 - 30 - Oct 1 price swing. This signals scope for an extension towards 92.23, the 2.236 projection. The Oct 30 high of 96.65, is seen as a key short-term resistance where a break is required to highlight a possible base. Initial resistance is 94.73, Nov 1 high.
EURGBP TECHS: Corrective Bounce
- RES 4: 0.8523 High Aug 22
- RES 3: 0.8464 High Sep 11 and a key resistance
- RES 2: 0.8371/0.8448 50-day EMA / High Oct 31 and reversal trigger
- RES 1: 0.8344 20-day EMA
- PRICE: 0.8331 @ 06:44 GMT Nov 13
- SUP 1: 0.8260 Low Nov 11
- SUP 2: 0.8250 Low Apr 14 ‘22
- SUP 3: 0.8203 Low Mar 7 2022 and a major support
- SUP 4: 0.8200 Round number support
EURGBP recovered Tuesday, bouncing off the fresh cycle low printed at the start of the week. Short-term gains are - for now - considered corrective. The cross has recently breached support at 0.8295, the Oct 18 low, confirming a resumption of the downtrend. Note that MA studies are in a bear-mode position, highlighting a dominant downtrend. Sights are on 0.8250, the Apr 14 2022 low. Key short-term resistance is at 0.8448, the Oct 31 high.
