NATGAS: Gulf South Pipeline Shows Freeport Unable to Flow Gas

• RES 4: 0.8525 High Jun 6  
• RES 3: 0.8499 High Jul 1 and a key resistance 
• RES 2: 0.8478 High Jul 5
• RES 1: 0.8461 High Jul 29 and the 50-day EMA
• PRICE: 0.8422 @ 15:46 BST Jul 30
• SUP 1: 0.8393/83 Low Jul 25 / 17 and the bear trigger  
• SUP 2: 0.8366 2.236 proj of the Apr 23 - 30 - May 9 price swing
• SUP 3: 0.8333 1.0% 10-dma envelope
• SUP 4: 0.8279 3.00 proj of the Apr 23 - 30 - May 9 price swing

Recent gains in EURGBP appear to have been a correction and a bearish theme remains intact. The move down earlier this month resulted in a print below key support at 0.8397, the Jun 14 low and a bear trigger. A clear break of this price level would confirm a resumption of the medium-term downtrend and open 0.8366, a Fibonacci projection. The 20-day EMA has been breached, the next firm resistance is seen at 0.8461, the 50-day EMA.

There is relatively intrigue expected with Wednesday’s coupon auction size announcement in the QRA (see table below for estimates): Treasury confirmed in May that “based on current projected borrowing needs, Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters.”

• We have not seen any expectations that Treasury has changed its mind, thus leaving the Aug-Sep-Oct auction sizes unchanged from prior (though there are some expectations that inflation-linked TIPS sizes could be upped modestly.
• Announced net bill issuance is roughly expected to be $150-200B in Q3 and $100-200B in Q4, though views range widely on this.

Some analysts, though, have raised the possibility of Treasury changing or dropping that guidance in light of large ongoing fiscal deficits (well above 6% of GDP, 2pp above pre-pandemic levels). That would be seen as a surprising and bearish development for Treasuries. Two such views:

• Deutsche: “We expect the language in the August statement to be similar [to May's], with a potential modification to indicate flexibility for size adjustments in 2025."
• SocGen: “We expect nominal auction sizes to once again remain unchanged this quarter, but we do expect this guidance to change in some way to indicate that we are getting closer to more coupon increases. If the language remains unchanged, we would read that as a bullish signal for duration.”

• RES 4: 1.3193 2.236 proj of the Apr 22 - May 3 - 9 price swing     
• RES 3: 1.3142 High Jul 14 ‘23 and a key resistance
• RES 2: 1.3107 Bull channel top drawn from the Oct 4 ‘23 low
• RES 1: 1.2938/3044 High Jul 24 / 17 and the bull trigger 
• PRICE: 1.2823 @ 15:45 BST Jul 30
• SUP 1: 1.2807 Low Jul 29
• SUP 2: 1.2787 50-day EMA
• SUP 3: 1.2741 Low Jul 4 
• SUP 4: 1.2613 Low Jun 27 and a key support  

GBPUSD traded lower Monday, extending the reversal that began Jul 17, before recovering from the session low. Support around the 20-day EMA has been cleared and this signals scope for a move towards 1.2787, the 50-day EMA. The latest move down appears to be a correction - for now. Moving average studies are in a bull-mode set-up, highlighting a rising trend. Key resistance and the bull trigger is unchanged at 1.3044, the Jul 17 high.