CREDIT PRE-MARKET: EUR Market Wrap
- Bunds closed 3-5bp tighter – DM team flagged that morning trade was in a relatively tight range, amid mixed data after German ZEW disappointed, while a surprise fall in UK unemployment, in-line wages and a higher claimant count led to Gilt underperformance. Having strengthened modestly on the day, core Fl pushed to highs which sustained into the close after softer-than-expected US producer prices.
- Main/XO ended +0.2bp/flat at 61.5bp/325bp while €IG/€HY was +1bp/+4bp. IG Energy underperformed at +1.8bp though remains comfortably the best YTD corp performer at -18.6bp vs. -9bp for €IG corps.
- $IG/$HY ended -1.7bp/+0.5bp, bringing MoM performance vs. EUR equivalents to essentially flat. Cyclicals were the only IG sector wider at +1bp and now sit as the second worst WoW performer at -2.8bp vs. $IG at -4.5bp.
- SXXP ended +0.5% while SPX was +1.7%. Notable €IG movers included VF Corp +7%, Aliaxis +7%, Neste +6%, Warner Bros +6%, Baxter International -7%, PostNL -3%.
- SX5E/SPX futures are +0.3%/flat. In China, following several days of higher yields, the bond market grabbed hold of the drop in aggregate financing and rallied hard throughout the day.
- Later the focus will be on US July CPI which is forecast to remain at 3% y/y but for core to ease 0.1pp to 3.2% (See https://roar-assets-auto.rbl.ms/files/65736/USCPIPrevAug2024.pdf). UK July CPI/PPI, euro area Q2 employment/GDP and June IP are also released.
| Date | GMT/Local | Impact | Flag | Country | Event |
| 14/08/2024 | 0600/0700 | *** | UK | Consumer inflation report | |
| 14/08/2024 | 0600/0700 | *** | UK | Producer Prices | |
| 14/08/2024 | 0600/0800 | *** | SE | Inflation Report | |
| 14/08/2024 | 0645/0845 | *** | FR | HICP (f) | |
| 14/08/2024 | 0900/1100 | ** | EU | Industrial Production | |
| 14/08/2024 | 0900/1100 | *** | EU | GDP (p) | |
| 14/08/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index | |
| 14/08/2024 | 1230/0830 | *** | US | CPI | |
| 14/08/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUDUSD TECHS: Holding On To Its Recent Gains
- RES 4: 0.6895 High Jul 13 / 14 2023
- RES 3: 0.6871 High Dec 28 and a key resistance
- RES 2: 0.6839 High Jan 02
- RES 1: 0.6799 High Jul 11
- PRICE: 0.6774 @ 06:53 BST Jul 15
- SUP 1: 0.6703 20-day EMA
- SUP 2: 0.6657 50-day EMA
- SUP 3: 0.6576 Low Jun 10 and a key support
- SUP 4: 0.6558 Low May 8
AUDUSD bullish conditions remain intact and the pair is holding on to its recent gains. The move higher last week marks an extension of the recent breach of resistance at 0.6714, the May 16 high. The clearance of 0.6714, confirmed a resumption of the bull leg that started Apr 19. Sights are on 0.6839 next, the Jan 2 high. Key short-term support has been defined at 0.6576, the Jun 10 low. Initial firm support is at 0.6703, the 20-day EMA.
EUROZONE ISSUANCE: EGB Supply - W/C 15 July, 2024 (2/2)
- Spain will look to hold a Bono/Olbi auction on Thursday. On offer will be the 1.25% Oct-30 Obli (ISIN: ES0000012G34), the on-the-run 10-year 3.45% Oct-34 Obli (ISIN: ES0000012N35) and the 0.85% Jul-37 Obli (ISIN: ES0000012I24). The auction size will be confirmed this afternoon but we think we will probably see a return to E4.5-5.5bln auction target ranges (after the previous E5-6bln range earlier this month when the new 7-year Obli was launched).
- France on Thursday 18 July will then look to hold an MT OAT auction with E9.5-11.5bln on offer – larger than seen last month in the midst of the election campaign, but smaller than the E12.0-12.5bln upper limits seen through the rest of 2024. On offer will be both on-the-run issues: the 3-year 2.50% Sep-27 OAT (ISIN: FR001400NBC6) and the 5-year 2.75% Feb-30 OAT (ISIN: FR001400PM68) alongside the off-the-run 1.00% May-27 OAT (ISIN: FR0013250560) and the 2.00% Nov-32 OAT (ISIN: FR001400BKZ3).
- France will then return later in the day to hold an IL OAT auction with E1.75-2.5bln on offer of the following: the 0.10% Mar-28 OATi (ISIN: FR0013238268), the 0.10% Mar-29 OATei (ISIN: FR0013410552), the 0.60% Jul-34 OATei (ISIN: FR001400JI88) and the 0.10% Jul-53 OATei (ISIN: FR0014008181).
NET NOMINAL FLOWS: This week sees two large redemptions totalling E29.2bln: E11.8bln from a formerly 5-year Austrian RAGB and E17.4bln of a formerly 10-year Dutch DSL. Coupon payments for the week are E3.5bln, of which E1.4bln are Dutch, E0.9bln are Italian, E0.7bln are Austrian, E0.2bln are Greek and E0.2bln are from the EFSF. This leaves estimated net flows for the week at negative E2.5bln versus positive E25.1bln last week.
BTP TECHS: (U4) Bull Cycle Remains In Play
- RES 4: 119.55 1.764 proj of the Jun 11 - 21 - Jul 2 price swing
- RES 3: 119.00 Round number resistance
- RES 2: 118.58 High May 16 and a key resistance
- RES 1: 117.99 High Jul 11
- PRICE: 117.72 @ Close Jul 12
- SUP 1: 116.55 20-day EMA
- SUP 2: 116.07 Low Jul 8
- SUP 3: 114.72 Low Jul 2
- SUP 4: 114.35 Low Jun 11 and key support
BTP futures have recovered from 114.72, the Jul 2 low. Last week’s gains resulted in a break of resistance at 117.09, the Jun 21 high, and firmer resistance at 117.62, the Jun 5 high. This undermines a recent bearish theme and signals scope for a climb towards 118.58, the May 16 high and a key resistance. Initial support lies at 116.55, the 20-day EMA. A clear break of it would highlight a potential reversal.
