EQUITIES: Medium-Term Trend Direction for Eurostoxx 50 Futures Remains Up
Eurostoxx 50 futures have recovered from their recent lows. The M/T trend direction remains up and the recent pullback is considered corrective. Support to watch is the 50-day EMA, at 5326.29. It has recently been pierced. A clear break of this average would highlight a stronger short-term bear threat and suggest scope for a deeper retracement towards 5202.00, a Fibonacci retracement. A continuation higher would open the 5600.00 handle. The trend condition in S&P E-Minis remains bearish and the contract continues to trade closer to its recent lows. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold. Recent gains are considered corrective and the bounce is allowing this set-up to unwind. Firm resistance to watch is 5955.55, the 50-day EMA.
- Japan's NIKKEI closed lower by 93.54 pts or -0.25% at 37751.88 and the TOPIX ended 12.4 pts higher or +0.45% at 2795.96.
- Elsewhere, in China the SHANGHAI closed lower by 3.33 pts or -0.1% at 3426.429 and the HANG SENG ended 30.57 pts higher or +0.12% at 24771.14.
- Across Europe, Germany's DAX trades lower by 60.1 pts or -0.26% at 23319.95, FTSE 100 lower by 26.86 pts or -0.31% at 8679.33, CAC 40 up 8.26 pts or +0.1% at 8121.98 and Euro Stoxx 50 down 3.64 pts or -0.07% at 5480.97.
- Dow Jones mini up 29 pts or +0.07% at 41642, S&P 500 mini up 5.75 pts or +0.1% at 5624, NASDAQ mini up 26 pts or +0.13% at 19522.75.
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EURIBOR OPTIONS: Call spread buyer
ERM5 98.25/98.37cs, bought for 0.25 in 17k.
GILTS: Futures Gap Lower At The Open; Feb 12 Low Intact For Now
Gilt futures gap lower at the open, catching up with weakness in core EGBs and posting fresh session lows of 92.53 at typing (-77 ticks today).
- Zooming out, a bull cycle is still in play and the pullback from the Feb 6 high appears corrective for now. The Feb 12 low at 92.31 remains intact, while firm resistance is the Feb 10 high at 93.71.
- The cash curve has bear steepened, with yields 5-7bps higher. 10-year yields are up to 4.57%, just short of last Wednesday’s high of 4.58%. The 10-year Gilt/Bund spread has widened 1bp to 208bps.
- For more colour on weekend news and this week’s calendar, see our morning STIR note above.
BONDS: Treasuries and Gilt Roll view
Most Desks will be starting to look at rolling their March Positions into June, pace should be expected to pick up towards the end of the Week, and will be completed next Week.
JPM:
- WNA: Bullish.
- USA: Bullish.
- UXY: Mildly bearish.
- TYA: Mildly bearish.
- FVA: Bearish.
- TUA: Bearish.
UBS:
- UBS recommend selling the Gilt March future and buying the June future "owing to valuations, a high switch potential and given positioning appears on the long side."
