GERMANY: Government Sets Out Roadmap For Big Reforms By July

"The REPUBLIC OF FRANCE has mandated BARCLAYS, BNP PARIBAS, BofA SECURITIES, CREDIT AGRICOLE CIB, DEUTSCHE BANK and MORGAN STANLEY to act as Joint Lead Managers on an upcoming new Green OAT, due 25 June 2037. The transaction will be launched by syndication in the near future, subject to market conditions." From market source

• Note that France's green issuance cap for 2026 is set at E23bln.
• Green syndications in the past have ranged from E5-8bln in size. This is the shortest maturity green OAT to be launched and we therefore look for a transaction of E7-10bln. We expect the transaction to take place tomorrow.

• In the equity space, a strong rally in S&P E-Minis last week highlights an extension of the reversal that started Mar 31. Note that trend signals remain bearish and for now, this suggests gains are corrective. A continuation higher would open 6921.09 next, the 76.4% retracement of the Jan 28 - Mar 31 bear leg. Key medium-term resistance and the bull trigger is far off at 7096.50, the Jan 28 high. Initial firm support to watch lies at 6567.00, the Apr 6 low. First support lies at 6701.96, the 50-day EMA.
• EUROSTOXX 50 futures are holding on to the bulk of their recent gains. The contract has traded through both the 20- and 50-day EMAs, paving the way for a climb towards 5945.47, the 76.4% retracement of the Feb 26 - Mar 23 bear leg. First key support to watch lies at 5525.00, the Apr 2 low. A move lower and a breach of this support would highlight a reversal. Initial support lies at 5730.73, the 50-day EMA.

• USDJPY (+0.27%) trades just 30 pips shy of the psychological 160.00 mark once again, as the dollar benefits from the failed Middle East talks over the weekend. This keeps the Mar 30 high and bull trigger of 160.46 in focus, before more meaningful resistance at 161.95, the 2024 highs.
• Core fixed income dynamics continue to place pressure on the yen, especially as the market may be questioning the short-term hiking trajectory for the BOJ. Overnight, central bank rhetoric overnight may have cooled expectations of a hike later this month by signalling a more cautious stance.
• “Looking ahead, developments in the Middle East remain uncertain and we will closely monitor them and their potential impact on economic activity, prices, and financial conditions,” Ueda said in a speech read by his deputy, Ryozo Himino, in Tokyo on Monday. The governor is in Washington this week for a series of meetings of global policymakers.
• This is in line with our recent reporting, where one former BOJ chief economist told MNI the BOJ will find it difficult to raise its 0.75% policy interest rate this month given heightened uncertainty over the Strait of Hormuz and the risk of a significant global economic slowdown.
• Offsetting this narrative for the JPY are the lingering concerns of investors surrounding MoF intervention, where rhetoric has been more forceful in recent weeks.