COMMODITIES: Key Resistance and Bull Trigger for WTI at $66.48, the Jan 30 High
A bull cycle in WTI futures remains intact. However, the reversal from the Jan 29 high continues to highlight a corrective cycle. Attention is on support at the 20-day EMA, at $61.76. The 50-day EMA lies at $60.21. A clear breach of the 50-day average would highlight a stronger reversal and open $58.53, the Jan 20 low. Key resistance and the bull trigger has been defined at $66.48, the Jan 30 high. The latest bounce in Gold highlights a retracement of the Jan 29 - Feb 2 sell-off. The next two resistance points to monitor are $5139.9 and $5314.0, Fibonacci retracement levels. Note that the sharp sell-off from the Jan 29 high highlights a potential top in the L/T trend and from a S/T perspective, an unwinding of the recent extreme overbought condition. A resumption of bearish activity would refocus attention on $4403.0, the Feb 2 low.
- WTI Crude up $0.39 or +0.62% at $63.73
- Natural Gas up $0.01 or +0.29% at $3.517
- Gold spot up $79.27 or +1.66% at $4855.67
- Copper down $2.3 or -0.4% at $579.7
- Silver up $2.69 or +3.8% at $73.5603
- Platinum up $4 or +0.2% at $1991.71
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GILTS: Resistance Broken In Futures, Trend Support Broken In 10s, Curve Flattens
The rally stemming from yesterday’s German CPI data and ongoing geopolitical risks extends further.
- Futures have broken resistance at the November 27 top (91.93), trading as high as 92.05. Next level of upside interest noted at the November 12 high (92.31).
- Yields 2.5-7.5bp lower.
- 2-Year yields have registered the lowest level seen since August ’24.
- 10-Year yields have broken uptrend support drawn off the late ’21 lows (admittedly after several adjustments being made for similar breaches during ’25), which switches focus to the cluster of October and November lows (basing at 4.369%).
- The GBP4.25bln auction of the 4.125% Mar-31 gilt passed smoothly.
- BoE-dated OIS moves to price 43bp of easing through year-end vs. 40.5bp late yesterday.
- SONIA futures 0.5-5.5 firmer, strip flattens. SFIH6/Z6 moves to fresh cycle lows, nearing the May ’24 base (-27.5).
- The latest BoE DMP survey will be released tomorrow.
- As a reminder, we think that progress on headline CPI and official labour market data will not be sufficient to justify the next BoE rate cut, at least not in isolation. It is likely that the Bank will also need to see progress on inflation expectations data as well as further DMP prints and a non-adverse result from the Agents' Pay Survey.
Fig. 1: 10-Year Gilt Yield (%)
Source: MNI - Market News/Bloomberg Finance L.P.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Feb-26 | 3.712 | -1.3 |
Mar-26 | 3.619 | -10.6 |
Apr-26 | 3.509 | -21.6 |
Jun-26 | 3.441 | -28.5 |
Jul-26 | 3.368 | -35.8 |
Sep-26 | 3.335 | -39.1 |
Nov-26 | 3.300 | -42.5 |
Dec-26 | 3.293 | -43.2 |
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jan08 $1.1800(E1.8bln); Jan09 $1.1500(E5.3bln), $1.1800(E2.3bln); Jan12 $1.1300(E1.5bln), $1.1800(E1.3bln)
- USD/JPY: Jan08 Y156.15($2.1bln), Y157.00($2.9bln)
- AUD/USD: Jan08 $0.6500(A$1.3bln), $0.6730(A$1.1bln)
- USD/CNY: Jan08 Cny7.0469($1.2bln)
SECURITY: Risks Abound As US Tracks Russian-Flagged Tanker In North Atlantic
A standoff could be developing in the North Atlantic, with at least one Russian naval vessel having been dispatched to guard an empty oil tanker that may be a target for US military interception, according to NYT and WSJ reports. The tanker was formerly known as the Bella 1. Having failed to dock in Venezuela to load oil, it evaded the US blockade of sanctioned vessels and steamed into the Atlantic in December, with its crew repelling US attempts to seize it. Reports suggest the tanker's crew changed the vessel's designation to 'Marinera' and painted a Russian flag on its hull in an effort to claim Moscow's protection.
- Newsweek reports the ship is currently between Iceland and the UK, traversing part of the GIUK gap, a key two-channel naval chokepoint in the North Atlantic.
- The UK Defence Journal reports, "The movement comes as evidence mounts that the United States is preparing a maritime interdiction operation to prevent the tanker reaching a safe haven [...] As Marinera progresses northward, open-source observers have identified a corresponding increase in Western intelligence, surveillance and reconnaissance activity across the North Atlantic.[...] the pattern and timing of these movements closely match known requirements for a compliant or non-compliant maritime boarding operation."
- The seizure of the Skipper tanker off the coast of Venezuela in December passed off relatively smoothly (albeit as an early indicator of US intentions towards Venezuela). However, a potential boarding operation in the North Atlantic on a nominally Russian-flagged tanker, with the reported close proximity of Russian naval vessel/vessels, presents a much higher risk of conflict escalation.
