US 10YR FUTURE TECHS: (H6) Corrective Bounce
- RES 4: 113-29+ High Oct 17 and a key resistance
- RES 3: 113-23 High Oct 23
- RES 2: 113-07/22+ High Dec 3 / High Nov 25
- RES 1: 112-18+/112-24 Intraday low / 20-day EMA
- PRICE: 112-14 @ 11:23 GMT Dec 11
- SUP 1: 111-29 Low Dec 10
- SUP 2: 111-19 1.236 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 3: 111-11 1.382 proj of the Oct 17 - Nov 5 - 25 price swing
- SUP 4: 111-00 Round number support
A bearish theme in Treasuries remains intact and the latest bounce appears corrective. An important short-term support at 112-07, the Nov 5 low and a bear trigger, has been cleared. The breach strengthens a bear theme and signals scope for a move towards 111-19 next a Fibonacci projection. Initial key resistance to watch is seen at 112-24, the 20-day EMA. A break of this average would signal a possible reversal.
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BONDS: Japanese Investors Were Large Net Buyers Of Italian Debt In September
Japanese investors net bought JPY361bln of Italian debt in September, according to domestic balance of payments data released overnight. This was the third largest single month net inflow since the start of 2021, after JPY423bln in February ’25 and JPY375bln in July ’21.
- After being subject to modest widening pressure in late-August/early-September, the 10-year BTP/Bund spread has resumed this year’s narrowing trend. BTP outperformance has been supported by relatively political stability in Italy versus the likes of France, improved domestic fiscal metrics and lower EUR rates vol. This combination of factors looks to have tempted Japanese investors back into BTPs in September, after a few months of net outflows in late Q2/early Q3.
- Japanese investors net bought JPY188bln of French debt in September, despite ongoing political uncertainty through the month amid the resignation of ex-PM Bayrou. It will be interesting to see aggregate net flows in October, with new PM Lecornu's budget negotiations dominating headline flow.
- There were JPY180bln of net sales in German bonds in September, while Gilts saw familiar net inflows.
- Meanwhile, Japanese investors net purchased JPY1,126bln of US Treasuries, bringing the year-to-date net inflow to JPY6,451bln.
- Our Asia-Pac team highlighted overnight that the larger-than-expected Japanese current account surplus was a combination of both the trade balance component and a surge in the primary income balance.
SOFR OPTIONS: BLOCK/Screen: Feb'25 SOFR Call Condor
- Total 4,000 SFRG6 96.68/96.81/96.87/97.00 call condors, 0.75 at 0612:07ET
US 10YR FUTURE TECHS: (Z5) Bear Threat Remains Present
- RES 4: 114-02 High Oct 17 and the bull trigger
- RES 3: 113-29 High Oct 22
- RES 2: 113-18+ High Oct 28
- RES 1: 113-02 High Nov 5& 7 and a key near-term resistance
- PRICE: 112-21+ @ 11:10 GMT Nov 11
- SUP 1: 112-09+ Low Nov 5
- SUP 2: 112-08+ 38.2% retracement of May - Oct Upleg
- SUP 3: 112-08/06 100-dma / Low Sep 25 and a reversal trigger
- SUP 4: 112-02 Trendline support drawn from the May 22 low
A short-term bear theme in Treasuries remains in place. Attention is on a reversal trigger at 112-06, the Sep 25 low, and the 100-DMA, at 112-08. A clear break of these price points would expose a trendline support at 112-02. The trendline is drawn from the May 22 low. Resistance to watch is 113-02, the Nov 5 and 7 high. Clearance of this level would highlight a potential bullish reversal.
