US STOCKS: Late Equities Roundup: Recovering From Midday Lows

European curves steepened Wednesday, with Gilts slightly outperforming Bunds.

• Yields were higher in early trade, amid uncertainty over the U.S. federal government shutdown that started overnight, and supply weighing somewhat (E5B of 10Y Bund).
• However, the tone was lightened as data proved to be on the dovish side: Italian and Spanish PMIs disappointed, while yields saw the biggest move of the day (to the downside) as US ADP private payrolls unexpectedly contracted. Eurozone HICP came in broadly in line with consensus.
• On the day, the German and UK curves both twist steepened.
• Periphery/semi-core EGB spreads closed a little tighter, with BTPs outperforming.
• Thursday's schedule includes French industrial production and Spanish labor market data, with DMP inflation expectations the highlight of the UK docket. There will also be attention on Swiss inflation, as well as appearances by ECB's Makhlouf, Villeroy and de Guindos.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.6bps at 2.013%, 5-Yr is down 0.8bps at 2.301%, 10-Yr is up 0.2bps at 2.713%, and 30-Yr is up 1.8bps at 3.298%.
• UK: The 2-Yr yield is down 2bps at 3.965%, 5-Yr is down 1.9bps at 4.117%, 10-Yr is down 0.3bps at 4.696%, and 30-Yr is up 0.5bps at 5.511%.
• Italian BTP spread down 1bps at 81.3bps /  French OAT down 0.5bps at 81.7bps

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 151.21 High Mar 28 
• RES 2: 150.92 High Aug 1 and a key resistance
• RES 1: 148.84/149.96 High Sep 30 / 26 and the bull trigger   
• PRICE: 147.16 @ 16:29 BST Oct 1
• SUP 1: 146.59 Low Oct 1
• SUP 2: 146.36 Trendline support drawn from the Apr 22 low   
• SUP 3: 145.49 Low Sep 17 and a pivot support
• SUP 4: 144.23 Low Jul 7 

USDJPY continues to weaken as the retracement from last week’s high print extends. The move down has resulted in a clear breach of the 50-day EMA, at 147.60. This signals scope for a deeper retracement and exposes the key short-term pivot support at 145.49, the Sep 17 low. A clear break of this level would cancel a recent bull theme. On the upside a reversal higher would refocus attention on resistance at 149.69, the Sep 26 high and a bull trigger.         

• Crude prices are drifting lower after falling sharply this week amid oversupply concerns ahead of OPEC’s Sunday meeting, with conflicting reports on the size of a potential November hike. The US government shutdown is also bearish for prices.
• WTI Nov 25 is down by 0.8% at $61.9/bbl.
• The move leaves WTI 7% below Friday’s highs, with this reversal lower refocussing attention on key support at $60.85, the Aug 13 low. A break of this level would reinstate the downtrend, opening $57.50, May 30 low.
• Meanwhile, spot gold printed another new record high at $3,895/oz earlier in the session, before unwinding most of the day’s gains to leave the yellow metal broadly unchanged around $3,864 at typing.
• Further gains in gold this week reflect rising haven demand amid concerns surrounding the US government shutdown which started today.
• The trend condition in gold is unchanged, and a bull cycle remains in play. Sights are on $3,909.4 next, a Fibonacci projection. On the downside, support to watch lies at $3,699.4, the 20-day EMA. A pullback would be considered corrective.
• Similarly, silver has rallied by 1.7% to $47.5/oz, taking the precious metal to its highest level since April 2011.
• Trend signals in silver remain bullish, with sights on $47.857 next, a 2.618 projection of the Sep 4 - 16 - 17 price swing, which was tested earlier today. Clearance of this level would pave the way for a climb towards the $49.00 handle.