BRENT TECHS: (F6) Short-Term Resistance Intact For Now
- RES 4: $71.45 - 76.4% retracement of the Jun 23 - Oct 20 bear leg
- RES 3: $70.69 - High Jul 30
- RES 2: $69.29 - High Sep 26 and a key resistance
- RES 1: $65.95 - High Oct 24
- PRICE: $62.79 @ 07:08 GMT Nov 13
- SUP 1: $59.97 - Low Nov 20 and the bear trigger
- SUP 2: $58.72 - Low May 5
- SUP 3: $57.99 - Low Apr 9 and a key support
- SUP 4: $56.05 - 2.00 proj of the Jul 30 - Aug 13 - Sep 26 price swing
A sell-off in Brent futures yesterday highlights a bearish development. An extension lower would expose key support and the bear trigger at $59.97, the Oct 20 low. Clearance of this support would confirm a resumption of the bear cycle. Note it is still possible that a bullish corrective cycle remains in play - for now. A breach of resistance at $65.95, the Oct 24 high, would signal scope for a stronger recovery near-term.
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BUND TECHS: (Z5) Continues To Appreciate
- RES 4: 130.41 1.382 proj of the Sep 3 - 10 - 25 price swing
- RES 3: 130.27 High Jun 20
- RES 2: 130.05 76.4% retracement of the Jun 13 - Sep 3 bear leg
- RES 1: 129.77 Intraday high
- PRICE: 129.71 @ 08:02 BST Oct 14
- SUP 1: 129.13/ Low Oct 10 / 128.67 50-day EMA
- SUP 2: 128.25 Low Oct 7
- SUP 3: 127.88 Low Sep 25
- SUP 4: 127.61 Low Sep 3 and the bear trigger
Bund futures continue to appreciate. This week’s early gains have resulted in a breach of resistance at 129.44, the Sep 10 high and a key short-term resistance. The break strengthens a bullish condition and signals scope for a continuation higher with sights in 130.05 next, a Fibonacci retracement point. Note that moving average studies are crossing into a bull-mode position, a bullish signal. First important support lies at 128.67, the 50-day EMA.
GILTS: Rallying On Trade War & UK Labour Report, Syndication Eyed
Gilts rally at the open, with Sino-U.S. trade tensions and the soft UK labour market report driving a parallel 4-5bp shift lower in yields across the curve.
- Futures rally to 91.77 before fading to 91.66, nearing key resistance at 91.82.
- 10-Year yields move towards the bottom of the multi-week 4.60-4.80% closing range, last 4.615%.
- GBP STIRs trade around pre-open levels still.
- SONIA futures 0.5-5.5 higher, while BoE-dated OIS is pricing 8bp of easing through year end, with the next 25bp cut now fully discounted come the end of the March meeting.
- Comments from BoE Governor Bailey are due later today (18:00 London)
- We covered that in more detail in the post-data & morning STIR bullets. We continue to view Bailey as the key swing voter for the Q4 decisions.
- On the supply front we remain on the lookout for the syndication of the 5.25% Jan-41 gilt. We expect that to be launched today.
- Bookrunners are Barclays, BofA Securities, Deutsche Bank, Morgan Stanley and RBC CM.
- The last 15-year syndication saw GBP8.5bln sold. We expect a smaller transaction this time and also note that the last long-dated syndication was only sized at GBP4.0bln (for the 30-year in May). We therefore expect a transaction size in the GBP4.0-8.5bln range (probably around the middle to top half of that range).
SILVER TECHS: Off Its Intraday High
- RES 4: $53.546 - Today’s intraday high
- RES 3: $52.689 - 4.500 proj of the Sep 4 - 16 - 17 price swing
- RES 2: $52.386 - 4.382 proj of the Sep 4 - 16 - 17 price swing
- RES 1: $52.000 - Round number resistance
- PRICE: $51.763 @ 08:13 BST Oct 14
- SUP 1: $46.791 - 20-day EMA
- SUP 2: $43.308 - 50-day EMA
- SUP 3: $41.135 - Low Sep 17
- SUP 4: $40.404 - Low Sep 4
Trend signals in Silver remain bullish. The metal has traded to a fresh cycle high today, however, price action is volatile and the metal is off its intraday high. Recent gains have resulted in a move above a major resistance area around the $49.00-$50.00 region. This marks a high point from Jan ‘80 and Apr ‘11 and $50.00 represents a key psychological level. A clear break of this zone strengthens a bull theme. Support to watch is $46.791, the 20-day EMA.
