GILTS: Fading
Apr-26 12:10
Gilts have edged away from early session highs after bulls failed to retake 96.00 in futures. Macro headline flow has been light, with most of the discussions centred on the BoJ and JPY vol.
- Futures last print just above session lows, +1 on the day at 95.73.
- The bearish technical backdrop remains intact for the contract, with yesterday’s cycle low (95.36) presenting the initial target for bears.
- The early flattening bias sticks on the cash curve, with yields running little changed to 3bp lower.
- GBP STIRs also fade alongside gilts.
- That leaves SONIA futures flat to -4.5.
- Meanwhile, BoE-dated OIS shows ~40bp of ’24 cuts.
- U.S. data headlines from here.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-24 | 5.203 | +0.4 |
| Jun-24 | 5.129 | -7.1 |
| Aug-24 | 5.014 | -18.6 |
| Sep-24 | 4.954 | -24.6 |
| Nov-24 | 4.858 | -34.2 |
| Dec-24 | 4.796 | -40.4 |
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US TSY FUTURES: BLOCK, Large Jun'24 2Y Buy
Mar-27 12:10
- +14,705 TUM4 102-09.88, post time offer at 0754:51ET, DV01 $561,700. Contract trades 102-10.12 last (+.75).
FRANCE: Moody's See Larger Deficit Pointing to Higher Debt Levels Than Expected
Mar-27 11:59
- Moody's write that France's larger-than-expected 2023 deficit makes it unlikely that the government will succeed in reducing the deficit to 2.7% of GDP by 2027, and that the latest French numbers point to somewhat higher debt levels for longer than they had previously expected.
- Recall we wrote yesterday, the French ’23 deficit/GDP ratio printed at 5.5%. wider than the government’s 4.9% target and in line with pre-release reports/political commentary pointing to 5.4-5.6%.
- France’s sovereign credit rating is scheduled to be reviewed by Fitch and Moody’s (April 26th), S&P (May 31st) and Scope Ratings across the next two months.
- S&P’s update is likely to get the most interest as they currently have France at AA, with a negative outlook. Fitch has France one notch below at AA-; Outlook Stable.
- Our full piece on French deficit stats, ratings reviews and OAT markets here: https://marketnews.com/23-deficit-matches-leak-ind...
OUTLOOK: Price Signal Summary - WTI Trend Needle Continues To Point North
Mar-27 11:59
- On the commodity front, the trend condition in Gold remains bullish and the move higher on Mar 21, reinforces this condition. The initial rally delivered another all-time high and confirmed a resumption of the primary uptrend. Moving average studies are in a bull-mode condition, reflecting positive market sentiment. This signals scope for a climb towards $2230.1, a 1.50 projection of the Oct 6 - 27 - Nov 13 price swing. Key short-term trend support has been defined at $2146.2, the Mar 18 low.
- In the oil space, a bull theme in WTI futures remains intact and the latest pullback appears to be a correction. Recent gains resulted in a break of $79.87, the Mar 1 high. The move higher confirms a resumption of the uptrend that has been in place since mid-December last year. Sights are on $83.87 next, the Oct 20 ‘23 high. Support to watch is $79.83, the 20-day EMA.
