TURKEY: Industrial Production Up 2.5% Y/Y, PKK Dissolution Expected Within Days

• RES 4: 94.75 76.4% retracement of the Dec 3 - Jan 13 bear leg (cont)    
• RES 3: 94.50 High Apr 7 and key resistance       
• RES 2: 93.00 Round number resistance  
• RES 1: 92.63 High Apr 8                        
• PRICE: 91.22 @ 08:05 BST Apr 9
• SUP 1: 91.14 Intraday low                                       
• SUP 2: 91.03 Low Mar 28  
• SUP 3: 90.55 Low MAr 27 and key support     
• SUP 4: 9.00 Psychological round number 

A sharp sell-off in the Gilt futures this week highlights a strong reversal of the bull cycle between Mar 27 - Apr 7. A continuation down exposes the next key support located at 90.55, the Mar 27 low. Clearance of this level would confirm a full reversal of the Mar 27 - Apr 7 rally. On the upside, a resumption of gains would initially refocus attention on resistance at 92.63, yesterday’s high. A break would potentially highlight an early bullish reversal signal.

• RES 4: $34.903 - High Oct 23 ‘24 and the bull trigger 
• RES 3: $32.947/34.590 - 20-day EMA / High Mar 28 
• RES 2: $32.491 - 50-day EMA 
• RES 1: $30.815 - Low Feb 28                                     
• PRICE: $30.266 @ 08:09 BST Apr 9    
• SUP 1: $28.351 - Low Apr               
• SUP 2: $27.686 - Low Sep 6 ‘24 
• SUP 3: $27.180 - Low Aug 14 ‘24   
• SUP 4: $26.451 - Low Aug 8 ‘24 and a key support   

Silver continues to trade in a volatile manner. Last week’s sell-off confirmed a clear reversal of its recent uptrend. The metal on Monday, traded through support at $28.748, the Dec 19 low. A clear break of this level would signal scope for a continued sell-off, towards $27.686, the Sep 6 ‘24 low. Initial resistance to watch is $30.815, the Feb 28 low. The contract is oversold, gains would allow this set-up to unwind.

U.S. assets have come under pressure since yesterday’s European close, with the USD, equities and Tsys selling off.

• 10-year Tsy yields have moved away from session highs but are still up 6bps on the session at 4.36%. 30-year yields briefly marked above 5.00% for the first time since early January (and before that, October ‘23), but have since fallen back to 4.84%.
• Lurches higher in the VIX and MOVE indices will have prompted deleveraging, while a potential continued unwind of basis trade positions remains in focus for the bond market.
• A weak 3-year auction added pressure yesterday evening, while the confirmation of the U.S. reciprocal tariffs overnight (including a 104% levy on Chinese imports) has kept risk on the defensive.
• Although indirect take-up for the 3-year supply was broadly in line with recent auctions at 66.94%, it still raises questions around broader Tsy demand. Today’s 10-year and tomorrow's 30-year auctions will come under even greater scrutiny as a result.
• Swap spreads (vs. SOFR) have moved to fresh all-time lows, potentially indicative of funding/liquidity pressures. On that front, Wrightson ICAP have noted that “funding markets were tighter than we expected yesterday”.
• Alongside basis trade unwinds, some have suggested that the fall in swap spreads represents concerns that that domestic banks will have to shoulder the load of financing the federal deficit if foreign Tsy demand wanes.
• Already crimped financial intermediary capabilities also offer part of the explanation for the swap spread sell off and basis trade pressure.
• Speculation surrounding the potential imposition of a new taxation structure for foreign Tsy holdings may also be feeding into higher yields.

Figure 1: US 3/10/30-year Swap Spreads