COMMODITIES: Gold Continues to Retrace Jan 29 - Feb 2 Sell Off
A bull cycle in WTI futures remains intact. However, Monday’s impulsive sell-off continues to highlight the beginning of a corrective phase. Attention is on support at the 20-day EMA, at $61.22. The 50-day EMA lies at $59.88. A clear breach of the 50-day average would highlight a stronger reversal and open $58.53, the Jan 20 low. Key resistance and the bull trigger has been defined at $66.48, the Jan 30 high. Gold has recovered from Monday’s low and is retracing the Jan 29 - Feb 2 sharp sell-off. The next two resistance points to monitor are $5139.9 and $5314.0, Fibonacci retracement levels. Note that the sharp sell-off from last week’s high still highlights a potential top in the L/T trend and from a S/T perspective, marks an unwinding of the recent extreme overbought condition. A reversal lower would refocus attention on $4403.0, the Feb 2 low.
- WTI Crude up $0.46 or +0.73% at $63.69
- Natural Gas down $0.01 or -0.21% at $3.304
- Gold spot up $109.7 or +2.22% at $5056.7
- Copper down $5.45 or -0.9% at $603.2
- Silver up $4.47 or +5.25% at $89.7014
- Platinum up $68.52 or +3.09% at $2285.41
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EGBS: Bunds Pare Early Gains, Trend Condition Bearish
- The trend condition in Bunds remains bearish, with futures having pared early morning gains. Currently +5 ticks at 127.16, support and the bear trigger in Bunds is located at 126.75.
- The move away from today’s 127.31 high may have been a function of solid corporate supply and an uptick in European equities. Crude oil futures have been volatile, with markets still digesting the implications of the US’ special operation in Venezuela over the weekend.
- The German curve is bull flatter, with 30-year yields down 2bps. That leaves 5s30s down almost 2bps to 104.5bps. However, trendline support drawn from the April 2025 low remains intact.
- Long-end swap spreads are little changed. One focus for EUR rates markets in H1 is the impact of Dutch pension fund flows, with several funds having transitioned to a defined contribution scheme from January 1.
- 10-year EGB spreads to Bunds have unwound earlier narrowing, now up to +1bp wider on the session.
- In supply, Slovenia is holding a 10-year syndication today, and we remain on the lookout for start-of-year mandates from several Eurozone countries. Conventional auction supply kicks off tomorrow with Germany.
- This afternoon’s calendar includes the US ISM manufacturing report, with regional focus on tomorrow’s December flash inflation data from France and Germany.
Figure 1: German 5s30s Curve (Source: Bloomberg Finance L.P)
GERMAN T-BILL AUCTION RESULTS: 3/9-Month Bubills
| Type | 3-month Bubill | 9-month Bubill |
| Maturity | Apr 15, 2026 | Oct 14, 2026 |
| Allotted | E1.4bln | E1.14bln |
| Previous | E2.224bln | E2.372bln |
| Total sold | E2bln | E2bln |
| Target | E2.0bln | E2.0bln |
| Avg yield | 1.988% | 2.005% |
| Previous | 1.972% | 1.983% |
| Bid-to-cover | 2.56x | 3.41x |
| Previous | 1.09x | 1.42x |
| Bid-to-offer | 1.8x | 1.94x |
| Previous | 0.81x | 1.12x |
| Previous date | Dec 01, 2025 | Dec 01, 2025 |
GILTS: Yields Edge Lower As Geopolitics Dominate, 2s10s Nearer To '25 High
Gilts are a little firmer on the day, with wider core global FI off Asia/Friday lows.
- Geopolitical risks centred on the U.S. seizing Venezuelan President Maduro seemed to provide some background support for core global FI markets as European participants filtered in, with lower oil prices tied to a potential longer run uptick in Venezuelan crude also providing support (albeit with plenty of uncertainty evident on that front).
- However, the impending seasonal surge in both sovereign and corporate supply, coupled with a recovery from lows in oil markets, has limited the rally.
- Gilt futures +16 at 90.94. Key directional triggers remain at 90.50 & 91.93.
- Yields 2-3bp lower across the curve, bull steepening.
- 2s10s breaks above the Nov high (80.305bp), exposing the Sep high (83.794bp) which protects the ’25 top (84.583bp).
- A dovish drift seen in GBP STIRs alongside the move further out the curve. SONIA futures flat to +2.5, BoE-dated OIS pricing ~41bp of easing through year-end vs. ~39bp late Friday.
- UK lending data was a little firmer than expected.
- Final services PMI is due tomorrow, while the DMO’s ’26 supply schedule will get underway on Wednesday, via GBP4.25bln of the 4.125% Mar-31 gilt.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Feb-26 | 3.711 | -1.5 |
Mar-26 | 3.621 | -10.5 |
Apr-26 | 3.508 | -21.8 |
Jun-26 | 3.438 | -28.8 |
Jul-26 | 3.364 | -36.2 |
Sep-26 | 3.343 | -38.3 |
Nov-26 | 3.315 | -41.0 |
Dec-26 | 3.315 | -41.1 |
