BONDS: Gilt/Bunds On Track For First Sub-165bp Close Of ‘25
The higher beta of gilts to movements in Tsys (post-Fed) and ongoing underperformance of Bunds following the hawkish ECB repricing earlier in the week leaves the Gilt/Bund spread on track to register its first sub-165bp close of the year.
- UK paper continues to benefit from the post-Budget RV demand, accentuated by relative central bank repricing and the DMO’s ongoing skew away from long end issuance.
- Gilt bulls will look to force a close below the Sep ’24 closing low (162.01bp).
- That would expose round number support at 160bp, followed by the July ’24 closing low (156.93bp)
- Next week presents plenty of event risk.
- On the Bund side, the DFA will release its ’26 issuance plan on Thursday, while the ECB will present its final decision of ’25 (no change in policy settings expected).
- On the UK side, we will get the latest labour market report, inflation data and BoE interest rate decision (markets price ~90% odds of a rate cut at that event).
- Elsewhere, flash PMI readings are due in both Europe & the UK.
Fig. 1: 10-Year Gilt/Bund Spread (bp)
Source: MNI - Market News/Bloomberg Finance L.P.
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EURUSD TECHS: Corrective Cycle Extends
- RES 4: 1.1728 High Oct 17
- RES 3: 1.1669 High Oct 28 and key resistance
- RES 2: 1.1627 50-day EMA
- RES 1: 1.1606 Intraday high
- PRICE: 1.1601 @ 14:46 GMT Nov 11
- SUP 1: 1.1469 Low Nov 5 and the bear trigger
- SUP 2: 1.1425 1.500 proj of the Oct 17 - 22 - 28 price swing
- SUP 3: 1.1392 Low Aug 1 and bear trigger
- SUP 4: 1.1313 Low May 30
EURUSD has traded higher today. The pair has breached an initial important resistance at 1.1584, the 20-day EMA. The break paves the way for an extension of the corrective cycle, towards the 50-day EMA, at 1.1624. A clear break of the 50-day average would highlight a potentially stronger bull cycle. On the downside, a reversal would refocus attention on the bear trigger at 1.1469, the Nov 5 low. Clearance of this level would resume the downtrend.
EQUITY TECHS: E-MINI S&P: (Z5) Bullish Recovery
- RES 4: 7000.00 Psychological round number
- RES 3: 6993.12 3.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6974.04 3.382 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 1: 6867.00/6953.75 Intraday high / High Oct 30 and bull trigger
- PRICE: 6843.00 @ 14:29 GMT Nov 11
- SUP 1: 6655.70 Low Nov 7 and key short-term support
- SUP 2: 6571.25 Low Oct 17
- SUP 3: 6540.25 Low Oct 10 and a key support
- SUP 4: 6476.62 23.6% retracement of the Apr 7 - Oct 30 bull cycle
The trend condition in S&P E-Minis remains bullish and the bear leg since the Oct 30 high appears corrective. The contract has managed to find support below the 50-day EMA, currently at 6716.03 and a key support. Last Friday’s activity also highlights a potential reversal signal - a bullish doji candle. This defines key support at 6655.50, the Oct 7 low. A continuation higher would signal the end of a correction and open 6953.75, Oct 30 high and bull trigger.
SOFR OPTIONS: Two-Way Dec'25 SOFR Midcurve Call Spreads
- +10,000 0QZ5 97.00/97.25 call spds, 5.25 ref 96.905
- -4,000 0QZ5 96.93/97.06 call spds, 4.0
