FRANCE AUCTION RESULTS: I/L OATs

• In the equity space, a reversal higher in S&P E-Minis on Apr 9 highlighted the start of a correction. The trend condition has been oversold following recent weakness and gains have allowed this to unwind. The contract remains below important resistance points and the trend condition is bearish. The latest move down signals the end of the corrective cycle. Sights are on 4832.00, the Apr 7 low and bear trigger. Initial resistance to watch is 5437.24, the 20-day EMA. 
• EUROSTOXX 50 futures continue to trade above their recent lows. The latest bounce highlights a corrective cycle and this is allowing an unwinding of the recent oversold trend condition. Resistance levels to watch are 4978.63, the 20-day EMA, and 5113.20, the 50-day EMA. Key support and the bear trigger has been defined at 4444.00, the Apr 7 low. A break of this level would confirm a resumption of the downtrend.First support lies at 4664.00, the Apr 10 low.

• Another soft German auction (German auctions have been soft for three weeks now).
• The bids received were the lowest since August 2023 (albeit broadly similar to the volumes seen in January 2024).
• Indeed, to put it into perspective, there has only been one Schatz bid-to-cover below 2x over the past year before today (1.97x in July 2024). Today's 1.69x was therefore much softer, with the bid-to-offer at 1.29x.
• There's been no notably wider market reaction from the auction - but it is worth noting that we have now seen soft auctions in Schatz, Bobls, 10-year Green and 30-year Bunds.

The German government has lowered its 2025 economic forecast by 0.3pp to 0.0% according to a Handelsblatt sources report.

• "The outgoing German government has lowered its economic forecast. It expects gross domestic product (GDP) growth of only zero percent in 2025. This was reported to Handelsblatt by government sources. In January, the government had projected a growth rate of 0.3 percent".
• "For 2026, the federal government expects growth "around one percent," according to government sources. In January, the federal government had forecast growth of 1.1 percent".
• "This puts the government's projection on a similar level to the leading economic research institutes. Two weeks ago, they saw 0.1% growth for 2025 and 1.3% for 2026 in their 'Joint Economic Forecast'" ('Leading Institutes See Debt Brake Loosening Impact Starting 2026' - MNI, April 10).
• Private sector consensus for German real GDP growth also broadly mirrors the government's forecast, standing at +0.1% for 2025. It was downwardly revised by -0.1pp during the last three months.