EM CEEMEA CREDIT: MHP SE: $450mn 3.5Y - FV

• In the FI space, Bund futures remain in a clear downtrend and today’s bearish start to this week’s session reinforces current conditions. The break to a fresh cycle low today confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. Sights are on 126.53 next, the Mar 11 low (cont.). Initial firm resistance is seen at 128.01, the 20-day EMA. A break of this average would signal the start of a corrective bounce.
• Recent activity in Gilt futures highlights 90.50, the Dec 16 low, and 91.93, the Nov 27 high, as two important short-term directional triggers. A clear breach of support at 90.50 would signal scope for a deeper retracement towards 89.86, the Nov 19 low and a bear trigger. For bulls, a stronger resumption of gains and a breach of 91.93, would instead signal scope for a climb towards resistance at 92.55, the Nov 11 high.

Treasuries are modestly bear steeper on very thin volumes after the weekend, helped lower by a further sizeable sell-off in JGBs after last week’s BoJ hike to leave Treasuries underperforming EGBs. Moves are aided by further increases for crude oil and US equity futures, ahead of a light docket headlined by 2Y supply. 

• Cash yields are 0.5-2.4bp higher, with increases led by 20s.
• 2s10s at 67.5bps (+1.3bp) remains close to last week’s high of 69.1bp at interesting levels that prior to a brief spike to 73.8bp in early April was last higher in early 2022.
• TYH6 trades close to session lows of 112-11+ (-04+) on particularly low volumes of 165k.
• It has pulled back from recent highs, leaving a key short-term resistance level at 112-31 (Dec 18 high). Support is seen at 112-06 (Dec 16 low) whilst downside focus would be on a bear trigger at 111-29 (Dec 10 low).
• Data: Chicago Fed National Activity Index Sep (0830ET) – data picks up tomorrow including long-awaited Q3 GDP data
• Coupon issuance: US Tsy $69B 2Y Note auction - 91282CPS4 (1300ET). Last month’s auction saw a small 0.2bp tail although details firmed with bid-to-cover of 2.68 after 2.59 and indirect take-up rising to 58.1% from 53.65%.
• Bill issuance: US Tsy $86B 13W & $77B 26W bill auctions (1130ET)
• Politics: Trump’s schedule hasn’t been released yet

• On the commodity front, the trend structure in Gold is unchanged, it remains bullish and today’s fresh cycle high reinforces current conditions. The break higher confirms a resumption of the primary uptrend. The metal has traded through the psychological $4400.0 handle and this opens $4441.3 next, a 1.236 projection of the Oct 28 - Nov 13 - Nov 18 swing. Initial firm support to watch lies at $4240.5, the 20-day EMA.
• The trend condition in WTI futures remains bearish and short-term gains are considered corrective. MA studies are in a bear-mode position, highlighting a dominant downtrend. A key support and the bear trigger at $56.11, the Oct 17 low, has been breached. Clearance of this level resumes the downtrend and opens $53.77, a 1.764 projection of the Jul 30 - Aug 13 - Sep 26 price swing. Key short-term resistance to watch is $61.25, the Oct 24 high. First resistance is at $58.74, the 50- day EMA.