ASIA: Government Bond Issuance Today

S&P has revised the outlook on Italy's long-term foreign currency debt rating to positive from stable. The sovereign rating was affirmed at BBB+.

• This week we had flagged potential for this revision, noting that "the risks may be tilted towards an Outlook change to Positive, owing to a better 2026 fiscal outlook than S&P had previously assumed. We wouldn’t expect a major reaction in BTPs if this risk is realised – the BTP/Bund spread is currently at multi-year lows and has tightened ~60bps since S&P’s April 2025 decision. "
• Indeed, S&P explained "The positive outlook reflects our expectation that, despite the persistent uncertainty in international trade, Italy's diversified private sector will continue supporting current account surpluses, benefiting the economy's net external creditor position with the rest of the world, while the public sector should gradually reduce its net borrowing, putting government debt on a slow declining trend in 2028".

We've just published our preview of the February Treasury refunding round - Download Full Report Here

February Refunding Preview: Streamlining Before Upsizing

• The February Refunding round starts on Monday Feb 2 (1500ET) with the Treasury’s update on financing requirements for the current (Jan-Mar) and next (Apr-Jun) quarters, at which it is expected to largely maintain its borrowing projections for the current quarter.
• The main event is the full Refunding announcement on Wednesday Feb 4 (0830ET), in which any adjustments to the policy statement’s guidance on future auction size increases will be closely-watched as usual.
• The prevailing expectation is that there will be no change to the guidance "Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters", but that was also the overwhelming expectation in the last refunding round which surprised with a tweak, adding that "Treasury has begun to preliminarily consider future increases to nominal coupon and FRN auction sizes".
• Of course, it would be a shock if there were any changes to nominal coupons in this round given Treasury’s professed adherence to a “regular and predictable” approach. Our expectation remains that the next upsizing will be in November but the risks are skewed to a later increase. Consensus is fairly roughly split between November 2026 and February 2027.

• RES 4: 1.3929 High Jan 16 and a reversal trigger     
• RES 3: 1.3879 High Jan 20
• RES 2: 1.3807 50-day EMA 
• RES 1: 1.3643/1.3739 Low Dec 26 / 20-day EMA
• PRICE: 1.3509 @ 16:40 GMT Jan 30
• SUP 1: 1.3482 Intraday low
• SUP 2: 1.3473 Low Oct 2 ‘24
• SUP 3: 1.3400 50.0% retracement of the 2021 - 2025 uptrend 
• SUP 4: 1.3359 Low Jan 31 2024     

A bearish theme in USDCAD remains intact following a sharp sell-off this week. The move down also highlights an acceleration of the downleg. The pair has breached 1.3643, the Dec 26 low and sights are on 1.3473 next, the Oct 2 ‘24 low. Note that 1.3540, the Jun 16 ‘25 low, has also been breached, strengthening the bear cycle. The trend is oversold, a corrective bounce would allow this set-up to unwind. Resistance is at 1.3739, the 20-day EMA.