US 10YR FUTURE TECHS: (H6) Bear Threat

Bund yields have registered the highest level of the month over the past couple of sessions (2.720%), but bears have failed to force a retest of the 2.75% area that provided demand in late September/early October.

• Against this backdrop, J.P.Morgan recommended a tactical long in Bunds late on Friday,
• They noted that last week’s sell off “pushed 10-Year German yields closer to the upper-end of our expected 2.55-2.75% range”
• They maintain a “strategic bullish duration bias driven on the expectation of limited term premia in the German curve, positive carry, and improving long-term demand for EGBs”.
• Ultimately, they see “no clear domestic catalyst for German yields to break above recent ranges”. They also note that “the correlation of German yields to U.S. yield has weakened sharply over the past few weeks, which seems reasonable in our view and we expect this dynamic to persist going forward, thus limiting any sell-off contagion from other DM markets”.

• In the equity space, the trend condition in S&P E-Minis remains bullish and the latest selloff appears corrective - for now. Support at the 50-day EMA, at 6730.32, has been pierced, however, price is once again trading above the average. The  next key support to watch is 6655.50, the Nov 7 low. Friday’s price pattern is a doji candle - a reversal signal. Initial firm resistance to watch is 6900.50, the Nov 12 high. A breach of this level would be bullish.
• A medium-term bull trend in EUROSTOXX 50 futures remains intact and last week’s gains reinforce bullish conditions. However, the latest pullback suggests the start of a corrective phase. Price has traded through the 20-day EMA. Attention is on support at the 50-day EMA, at 5604.85, and 5599.00, the base of a bull channel drawn from the Aug 1 low. These two price points represent key support. A break would highlight a stronger reversal.

• "The EU has mandated Goldman Sachs Bank Europe SE, HSBC, J.P. Morgan, Natixis and UBS as Joint Lead Managers for its upcoming Fixed Rate RegS Bearer increase of the EU 2.500% benchmark due 14 October 2030 (EU000A4EG021). No further group. The transaction will be launched tomorrow, subject to market conditions."
• Probably a smaller syndication than some had expected. Just a single line and only 5-year maturity (but we are coming to the end of the year).