EGB SYNDICATION: Latvia sustainability bond framework update

A sharp pullback in WTI futures last week is for now, considered corrective. The contract traded through the 20-day EMA, at $97.88. Attention for now is on support at the 50-day EMA, at $86.29. A clear break of the 50-day average is required to highlight a stronger short-term reversal. On the upside key resistance and the bull trigger has been defined at $117.63, the Apr 7 high. Clearance of this hurdle would confirm a resumption of the uptrend. Recent gains in Gold appear to be corrective, however for now, a short-term bull cycle remains intact. The metal has pierced the 50-day EMA, at $4781.2. This signals scope for an extension towards $4914.9, a Fibonacci retracement point. Clearance of this level would open the $5000.0 handle. Initial firm support to watch lies at $4554.2, the Apr 2 low. A break of this level would be bearish.

• WTI Crude up $7.59 or +7.86% at $104.14
• Natural Gas up $0.03 or +1.17% at $2.677
• Gold spot down $32.36 or -0.68% at $4719.19
• Copper down $1.5 or -0.25% at $592.85
• Silver down $1.59 or -2.1% at $74.3175
• Platinum down $9.99 or -0.49% at $2040.14

EuroStoxx 50 futures are holding on to the bulk of their recent gains. The contract has traded through both the 20- and 50-day EMAs, paving the way for a climb towards 5945.47, a Fibonacci retracement point. Note that a break of 5945.47 would expose the key resistance and bull trigger at 6143.00, the Feb 26 high. First key support to watch lies at 5525.00, the Apr 2 low. A move lower and a breach of this support would highlight a reversal. A strong rally in S&P E-Minis last week highlights an extension of the reversal that started Mar 31. Note that trend signals remain bearish and for now, this suggests gains are corrective. A continuation higher would open 6921.09 next, a Fibonacci retracement point. Key medium-term resistance and the bull trigger is far off at 7096.50, the Jan 28 high. Initial firm support to watch lies at 6567.00, the Apr 6 low.

• Japan's NIKKEI closed lower by 421.34 pts or -0.74% at 56502.77 and the TOPIX ended 16.84 pts lower or -0.45% at 3723.01.
• Elsewhere, in China the SHANGHAI closed higher by 2.333 pts or +0.06% at 3988.558 and the HANG SENG ended 232.69 pts lower or -0.9% at 25660.85.
• Across Europe, Germany's DAX trades lower by 210.15 pts or -0.88% at 23592.72, FTSE 100 lower by 33.53 pts or -0.32% at 10565.95, CAC 40 down 74.2 pts or -0.9% at 8183.75 and Euro Stoxx 50 down 57.22 pts or -0.97% at 5872.34.
• Dow Jones mini down 215 pts or -0.45% at 47914, S&P 500 mini down 37 pts or -0.54% at 6818.5, NASDAQ mini down 156.5 pts or -0.62% at 25125.75.

The German curve has lightly bear flattened this morning, a familiar reaction in response to the latest deterioration in US-Iran relations. Ceasefire talks broke down over the weekend, but the fairly contained deviation from Friday’s close suggests markets still consider an offramp exists. 

• Schatz yields are up ~2bps to 2.62%, while 30-year yields are up 1bp to 3.59%.
• 30-year yields registered a fresh multi-year high last week, with markets potentially accounting for the longer-term inflationary impact of the war and/or the need for Government fiscal responses.
• This morning, Germany announced a E1.6bln package to help consumers and businesses with fuel prices.
• Bund futures are -23 ticks at 124.97. A bear cycle remains intact and the pullback from last week’s high reinforces this bear theme. The focus is on key short-term support and the bear trigger at 124.25, the Mar 27 low.
• OATs are a little more insulated than other EGB peers, after Moody’s deferred a ratings assessment in its periodic review on Friday (meaning a downgrade was avoided). The 10-year OAT/Bund spread is unchanged at 64.5bps, while the BTP/Bund spread has widened 1bp.
• This week’s Eurozone data calendar is relatively light, with final Eurozone March inflation data due on Thursday. ECB commentary from the IMF/World Bank Spring Meetings will likely attract most attention.

Figure 1: 30-year Bund Yields Since 2000, Weekly (Source: Bloomberg Finance L.P)