BOBL TECHS: (H6) Corrective Cycle Extends
- RES 4: 116.805 76.4% retracement of the Nov 26 - Dec 10 bear leg
- RES 3: 116.720 High Dec 4
- RES 2: 116.598 61.8% retracement of the Nov 26 - Dec 10 bear leg
- RES 1: 116.500 Intraday high
- PRICE: 116.450 @ 14:06 GMT Jan 7
- SUP 1: 16.217 20-day EMA
- SUP 2: 115.920/720 Low Jan 5 / Low Dec 10 and the bear trigger
- SUP 3: 115.660.4.000 proj of the Nov 6 - 14 - 26 price swing
- SUP 4: 115.600 Round number support
The trend set-up in Bobl futures is unchanged, the condition remains bearish and the latest recovery appears corrective. However, today’s gains undermine the bearish theme and highlights a potentially stronger short-term bull cycle. A continuation higher would open 116.598, a Fibonacci retracement. For bears, a reversal lower would refocus attention on 115.720, the Dec 10 low and bear trigger.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OAT: Outperformance May Reflect Cautious Optimism Ahead Of Crucial Vote Tomorrow
Today’s modest OAT outperformance looks to be a continuation of cautious 2026 budget optimism. Focus remains on tomorrow’s crucial National Assembly vote on the Social Security Financing Bill (PLFSS). If the PLFSS is passed, it would remove another hurdle to passing the overall budget before year-end. Increased confidence in an agreement on the 2026 budget would pave the way for the 10-year OAT/Bund to test and push through the 70bp figure. Intraday, the spread is 1bp narrower at 71.5bps, compared to a 0.5bp widening in the BTP/Bund spread.
- A reminder that on Friday, the National Assembly voted in favour of the revenue section of the PLFSS. However, this was helped by numerous absences in the National Assembly.
- There remains uncertainty around the voting intentions of the conservative Les Républicains, the centre-right Horizons and Green parties ahead of tomorrow’s vote.
- One positive is that centre-left Socialist Party First Secretary Olivier Faure instructed his lawmakers this morning to back the PLFSS.
- The vote is due to get underway at ~15:00CET (09:00ET, 14:00GMT) tomorrow. If the bill passes, it will return to the Senate, where there is the prospect of debate being shortened via a “preliminary question”.
SOFR: Early December Downtick Extends, Goldman Still Like SFRZ6/Z7 Steepeners
SOFR futures have softened in early trade this week, with cross-market inputs (hawkish ECB communique) allowing the weakness seen in early December to extend a little further.
- Goldman Sachs reaffirmed their preference for longer dated curve steepeners (such as SFRZ6/Z7) late on Friday.
- Ahead of this week’s Fed meeting they noted that “the upcoming change in Fed leadership and uncertainty around the composition of the committee could mean that terminal rate pricing proves less sensitive to any changes in the dots than usual”.
- Looking slightly further out they highlighted that “with just 22bp cumulatively priced for the first 3 meetings next year and 3 months of labor market data due before the January meeting, we continue to think risks lean marginally towards further pull-forward in cut pricing on larger-than-expected jumps in the unemployment rate. But with risks beyond the very near-term becoming more two-way given expected growth pick up next year, we stick with our preference for steepening expressions”.
STIR: Effective Fed Funds Rate
FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 3.89% (+0.00), volume: $88B
- Daily Overnight Bank Funding Rate: 3.89% (+0.00), volume: $167B
Earlier Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 3.93% (+0.01), volume: $3.221T
- Broad General Collateral Rate (BGCR): 3.90% (+0.03), volume: $1.321T
- Tri-Party General Collateral Rate (TCR): 3.90% (+0.03), volume: $1.295T
- (rate, volume levels reflect prior session)
