EQUITIES: Eurostoxx Futures Hold Above Recent Lows

Gilts hold lower, with supply-related pressure, higher oil and equity prices and spillover setup for the German fiscal vote weighing on wider core global FI markets.

• Futures remain within yesterday’s range, session lows of 91.80 thus far.
• Yesterday’s rally increased the risk to the bearish technical setup.
• Bulls need to overcome the Mar 17/7 highs (92.37/63), with the latter providing key resistance.
• Initial support located at the March 13 low (91.07).
• Yields 3.5-4.5bp higher across the curve, light steepening seen. Psychological levels (50bp in 2s10s and 100bp ins 5s30s) continue to cap steepening moves.
• 10-Year spread to Bunds ~1bp wider at 183bp, last week’s range (177.7-184.4bp) remains intact on a closing basis.
• Plenty of UK risk events scheduled over the next week or so, with the latest BoE decision (no change expected, vote split eyed), labour market data and Spring Statement all due.
• We will provide greater details covering our own and wider market expectations ahead of these events via the usual round of previews, as well as real-time and post-event colour.
• GBP4.25bln 4.375% Mar-28 gilt supply is due this morning.
• Outside of the auction, macro & cross-market cues are set to continue to dominate, given the backloaded nature of this week’s UK risk events.

Of note:

USDJPY 1.47bn at 150.00.

AUDUSD 1.62bn at 0.6320/0.6330.

EURUSD 1.34bn at 1.0900 (wed).

EURUSD 1.23bn at 1.0900 (fri).

USDJPY 1.19bn at 150.00 (fri).

USDCAD 2.99bn at 1.4280/1.4300 (fri).

EURUSD 1bn at 1.0925 (mon).

• EURUSD: 1.0900 (603mln), 1.0910 (311mln), 1.0915 (291mln).
• USDJPY: 149.00 (999mln), 149.75 (475mln), 150.00 (1.47bn).
• EURGBP: 0.8400 (300mln), 0.8425 (458mln).
• USDCAD: 1.4270 (399mln).
• AUDUSD: 0.6320 (922mln), 0.6330 (697mln), 0.6350 (213mln), 0.6430 (369mln).
• USDCNY: 7.2200 (400mln).

Initial highlights from Rehn. Not much to deviate from the ECB’s March guidance at first glance. More insight will likely be provided in the Q&A: “We are not pre-committed to any interest rate path. Policy rates are set at each meeting based on the latest information and our comprehensive assessment, next time on 17 April. The Governing Council retains full freedom of action in times of pervasive uncertainty”.

• “Tariffs and the related uncertainty will hit investment and slow down growth everywhere. The latest indicators on the US economy point to weaker than expected growth, which would also affect growth prospects in Europe”.
• “The growth outlook for the euro area remains subdued” …“In addition to cyclical factors, the euro area economy is also experiencing structural problems. In the ECB’s new forecast, productivity growth is slower than before. The weakness appears to be more structural than previously. But it would be wrong to say that it is entirely structural”.
• “Although there is little to be positive about in the security situation in Europe, the expected increases in defence spending and investment are at least likely to support GDP growth over the medium-term”.
• “Inflation in the euro area is stabilising at the ECB's 2% target”…“ Risks to the inflation outlook are two-sided”