US DATA: Mortgage Applications Pull Back, Likely More Volatility Ahead

Equity Option Expiries in Notional Terms for Friday's Triple Witching.

US:

• SPX: $2.91T vs $2.85T Friday.
• NDX: $106.21bn vs $104.53bn.
• Amazon: $16.24bn vs $15.33bn.
• Apple: $21.57bn vs $20.86bn.

EU: As of Friday's Data.

• SX5E: €252.84bn.
• SX7E: €19.05bn.
• DAX: €66.52bn.
• CAC: €6.54bn.
• FTSE: £24.27bn.

• In the equity space, the trend condition in S&P E-Minis remains bearish and fresh cycle lows last  week reinforced current conditions. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a 2.00 projection of the Dec 6 ‘24 - Jan 13 - Feb 19 swing. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5976.83, the 50-day EMA. First resistance is at 5726.75, the Mar 12 high.
• The medium-term trend direction in the EUROSTOXX 50 futures contract remains up and the recent pullback is considered corrective - for now. However, note that support at the 50-day EMA, at 5314.94, has been pierced. A clear break of this average would highlight a stronger short-term bear threat and suggest scope for a deeper retracement. This would open 5202.00, the 50.0% retracement of the Dec 20 ‘24 - Mar 3 bull leg. A  resumption of gains would open the 5600.00 handle.

UBS expect the FY25/26 gilt remit to provide fresh steepening pressure for the 2s10s curve.

• A couple of other factors also play into their view:
• They expect “an uneventful MPC to offer little support to gilts, especially since the data following the last meeting has also been relatively strong”.
• They are also of the view that “the broad-based deterioration in consumer confidence and ongoing drag from higher mortgage payments are posing downside risks to growth forecasts.”