EM CEEMEA CREDIT: Majid Al Futtaim: Final Terms

ERH6/ERM6 97.5625 put calendar spread, paper pays 0.75 for 3k all day

• Treasuries are on balance little changed from Friday’s close, with cash having firmed through European trading are opening a little lower following a Japan holiday.
• Cash yields are 0.5bp lower (3s) to 0.7bp higher (7s).
• Curves for now holds last week’s flattening, including 5s30s at 105.7bps vs fresh multi-year highs of ~127bps after the August payrolls report two weeks ago.
• TYZ5 trades at 113-07+ (-01+) on thin volumes only just approaching 200k, having eased back from a session high of 113-10.
• Some might look to initial resistance at 113-15+ but a firmer level is seen at 113-29 (Sep 5 high), with a bullish trend sequence in play. Support meanwhile is seen at 112-23+ (20-day EMA).   
• Data: Empire Mfg Sep (0830ET)
• Fed positions: Miran confirmation votes (~1730/2000ET) and Cook case – see STIR bullet
• Bill issuance: US Tsy $82B 13W & $73B 26W bill auctions (1130ET)
• Politics: Trump meets Ecumenical Patriarch Bartholomew (1400ET), Trump signs Presidential Memorandum (1600ET). Today also sees a second day of Bessent-He talks in Madrid, with a press conference potentially in the European afternoon

• In the FI space, recent gains in Bund futures resulted in a break of resistance at 128.87, the Aug 28 high and short-term bull trigger. The climb undermines a recent bearish theme and highlights a stronger reversal. Price has moved through the 129.00 handle, signalling scope for an extension towards 129.50, the Aug 5 high. Key support and the bear trigger has been defined at 127.61, the Sep 3 low. The latest pullback is - for now - considered corrective.
• A bull cycle in Gilt futures remains in play - a recent rally highlights a stronger corrective cycle and the contract is holding on to its gains. The move higher is allowing an oversold trend condition to unwind. Price has breached initial firm resistance at 90.84, the Aug 28 and 29 high. A continuation higher would open 92.06, the Aug 14 high. Initial support lies at 90.65, the Sep 5 low.