BUNDS: Heavy German supply is the early Focus
- The German Bund was mostly quoted two ticks wide pre Cash Open, with little change in its range.
- The Contract trades circa Yesterday's mid range, and the initial support and resistance are unchanged, these stand at 130.00 (support) and 130.80 (resistance).
- The US Treasuries took the lead Yesterday, the 10yr Yield fell through 4.20%, but the support noted at 4.1942% held, printed a 4.1852% low Yesterday.
- Next support in TYU5 was seen at 111.22, and this has again held Yesterday during the reversal and the fall lower in Futures following the US ISM Beat.
- This support level is unchallenged so far Today.
- There are no Tier 1 Data out of Europe, and US ADP hasn't moved markets for some time, the main focus this Week was always the US NFP Tomorrow. Early focus is on the Heavy German Supply this Morning.
- SUPPLY: UK £5bn 2028 (Equates to ~14k Gilt), should have a limited impact, German €6bn 10yr is heavy (equates to 50.3k Bund) will weigh.
- SPEAKERS: ECB Guindos, Cipollone, Lane, Lagarde, BoE Taylor.
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INDONESIA: Trade Surplus Narrows Sharply As Import Growth Jumps
The April trade surplus narrowed sharply and by a lot more than consensus expected due to a large jump in imports. The merchandise surplus stood at $150mn after $4327mn in March as imports rose 21.8% y/y up from 5.3% while exports rose only 5.8% y/y but still up from 3.2%. This was the worst balance since the Covid-impacted April 2020 deficit.
- The YTD surplus was higher than the same period last year at $11.07bn compared to $10.13bn. YTD export growth just outpaced imports at +6.7% y/y compared to +6.3% y/y.
- The surge in goods import growth was broad based with capex +36.3% y/y, raw materials +18.9% y/y and consumer goods +18.5% y/y, signalling solid domestic demand.
- Annual export growth was driven by strong shipments of agricultural & fish products +59.8% y/y and manufacturing +13.9%, while mining & other fell sharply 20.7% y/y, as coal fell. The data is nominal and so is also impacted by price changes.
- Non-oil exports to the US sank 20.9% m/m with the annual rate rising 18.4% y/y due to earlier frontloading of shipments to beat tariff deadlines. Indonesia posted at $1.3bn surplus with the US. Exports to China are up 12.9% y/y but down 15% y/y to Japan.
- In terms of services exports, April tourist arrivals rose 9.2% y/y.
BTP TECHS: (M5) Bull Cycle Extends
- RES 4: 122.70 2.000 proj of the Mar 14 - Apr 4 - 9 price swing
- RES 3: 122.00 Round number resistance
- RES 2: 121.93 76.4% of the Dec 5 ‘24 - Mar 14 bear leg (cont)
- RES 1: 121.43 1.618 proj of the Mar 14 - Apr 4 - 9 price swing
- PRICE: 121.15 @ Close May 30
- SUP 1: 120.22 20-day EMA
- SUP 2: 119.58/00 50-day EMA / Low May 14
- SUP 3: 118.76/09 Low Apr 15 / 14
- SUP 4: 117.28 Low Apr 10
A bull cycle in BTP futures remains intact and last week’s gains reinforce current conditions. Key resistance and the bull trigger at 120.72, the May 8 high, has been cleared. This confirms a resumption of the uptrend and opens 121.43 next, a Fibonacci projection. Key support to watch lies at 119.58, the 50-day EMA. A clear break of the average would signal scope for a deeper retracement. First support lies at 120.22, the 20-day EMA.
RATINGS: Mostly Affirmations On Friday, Brazil Moved To Stable At Moody’s
Sovereign rating reviews of note from after hours on Friday include:
- Moody's affirmed Brazil at Ba1, outlook changed to stable from positive
- S&P affirmed Lithuania at A; Outlook Stable
- Morningstar DBRS confirmed Germany at AAA, Stable Trend
- Morningstar DBRS confirmed Spain at A (high), Stable Trend
