EGBS: Hawkish BoJ Sources Piece Weighs On Bunds

Italy is scheduled to a conventional auction on Friday while Finland is due to hold an ORI auction tomorrow. Already this week, the EU, Belgium and Germany have held auctions while Slovenia held a syndication. We pencil in estimated gross issuance for the week of E29.2bln, a little lower than the E30.7bln last week.

For the full document with a summary of Q3/H2 funding updates, a recap of issuance so far this week and a look ahead to the rest of this week's and next week's issuance, click here.

• Finland will come to the market tomorrow to hold an ORI auction with up to E400mln on offer. Details are to be confirmed today.
• Italy will look to conclude issuance for the quarter on Friday with a 5/10-year BTP / CCTeu auction. On offer will be E1.25-1.5bln of the 5-year on-the-run 2.95% Jul-30 BTP (ISIN: IT0005637399) that was launched earlier this month via syndication alongside E1.25-1.5bln of the off-the-run 5-year 2.70% Oct-30 BTP (ISIN: IT0005654642). Also on offer will be E3.0-3.5bln of the on-the-run 10-year 3.60% Oct-35 BTP (ISIN: IT0005648149) and E1.5-2.0bln of the Apr-34 CCTeu (ISIN: IT0005652828) that was launched in last month’s auction.

• RES 4: 122.71 2.764proj of the May 14 - 20 - 21 price swing
• RES 3: 122.35 2.500 proj of the May 14 - 20 - 21 price swing 
• RES 2: 122.00 Round number resistance
• RES 1: 121.73 High Jun 13 and the bull trigger 
• PRICE: 121.13 @ Close Jun 24 
• SUP 1: 119.91 Low May 29      
• SUP 2: 119.48 Low May 26 
• SUP 3: 118.87 Low May 21  
• SUP 4: 118.51 Low May 14 and key support 

The trend condition in BTP futures is unchanged, it remains bullish and the latest pullback appears corrective. Gains earlier this month reinforce a bull theme and maintain the price sequence of higher highs and higher lows. Sights are on the 122.00 handle next. Key support to watch lies at 118.51, the May 14 low. A clear break of this level would highlight a reversal. First support is 119.91, the May 29 low.

Italy released its Q3 issuance programme on Tuesday. The MEF notes that E172bln was issued between January and May with a further E51bln expected in June. This leaves E115-125bln of gross issuance expected for H2. E225-245bln of gross issuance expected for Q2-Q4. This equates to gross issuance of E338-348bln for 2025, broadly in line with the E332-352bln of gross issuance from a similar calculation a quarter ago and with the initial 2025 target of E330-350bln.

New issues expected in Q3 (up to 10-year):

• 3-year BTP maturing 15 January 2029 (minimum outstanding E9bln, MNI expect a July launch).
• 7-year BTP maturing 15 November 2032 (minimum outstanding E10bln, MNI expect a September launch).
• 10-year BTP maturing 1 February 2036 (minimum outstanding E10bln, MNI expect a September launch).

Issues expected to be reopened in Q3 (up to 10-year):

• 2.55% Feb-27 BTP Short Term (minimum E9bln outstanding already exceeded).
• 5-year 2.95% Jul-30 BTP (minimum E10bln outstanding already exceeded).
• 7-year BTP maturing 15 July 2032 (minimum outstanding E10bln, already exceeded)
• 10-year BTP maturing 1 October 2035 (minimum outstanding E10bln)