FRANCE AUCTION PREVIEW: LT OATs Due This Morning
France will look to hold a LT OAT auction this morning. On offer will be a combined E10-12bln of the on-the-run 10-year 3.20% May-35 OAT (ISIN: FR001400X8V5), the 1.25% May-38 OAT (ISIN: FR0014009O62) and the 4.50% Apr-41 OAT (ISIN: FR0010773192).
- The on-the-run 10-year 3.20% May-35 OAT has attracted an average bid-to-cover ratio of 2.71x in its three auctions since February, for amounts issued between E5.9bln and E8.6bln. The April re-opening saw a 3.04x cover, with the low price of 98.520 exceeding the 98.431 pre-auction mid-price.
- The May-38 OAT was last re-opened in February, seeing a 4.83x bid-to-cover for the E1.6bln issued. The Apr-41 OAT was last re-opened in 2021.
- Danske Bank “expect that the auction will go well as France still trades with a solid discount to peers and in case there are flows out of the US, France is likely to benefit as it is one of the most liquid bond markets”.
- We wrote last week that a gradual consolidation of French public finances is intact, but officials have still highlighted the need to find E40bln of savings to meet its 4.6% 2026 budget deficit target. Over the weekend, PM Bayrou did not rule out a referendum to obtain public support for his future proposals.
- Timing: Results will be available shortly after the bidding deadline of 0950BST/1050CET.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GILT TECHS: (M5) Trading At Its Highs
- RES 4: 95.57 High Dec 11 ‘24 (cont)
- RES 3: 95.00 Round number resistance
- RES 2: 94.75 76.4% retracement of the Dec 3 - Jan 13 bear leg (cont)
- RES 1: 94.80 Intraday high
- PRICE: 94.30 @ 08:10 BST Apr 7
- SUP 1: 93.01 High Mar 20
- SUP 2: 92.13 20-day EMA
- SUP 3: 91.59 Low Mar 31
- SUP 4: 91.03 Low Mar 28
Gilt futures maintain a firmer tone and the contract is trading at its recent highs. A key resistance at 93.79, the Mar 4 high, has been cleared and this has been followed by a move through the 94.00 handle. The breach signals scope for a climb towards 94.75, 76.4% of the Dec 3 - Jan 13 bear leg (cont). On the downside, initial support lies at 93.01, the Mar 20 high. A firmer support is seen at 92.13, the 20-day EMA.
STIR: 5 Fed Cuts Priced Through Year-End
They heavy risk-off price action, driven by continued trade war worry and hardline tariff rhetoric from the Trump administration, promotes dovish repricing in USD STIRs.
- Pricing across ’25 Fed meetings shows ~19.5bp cuts for May, 49bp through June, 77bp through July, 97bp through September. 111bp through October and 125bp through December.
- Fed Funds now price ~24bp of additional easing through December ’25 vs. Friday’s closing levels, essentially adding one full cut into pricing over that horizon (pricing is a couple of bp more dovish than levels that prevailed ahead of Friday’s NFP release).
SILVER TECHS: Impulsive Reversal Wave
- 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: $29.826 @ 08:15 BST Apr 7
- SUP 1: $28.351 - Intraday low
- 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 has today 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.
