EGBS: OAT Outperformance Extends On French FinMin Comments, X-Asset Also Noted
An extension lower in crude oil markets, a move away from highs in European equity index benchmarks and comments from the French Finance Minister, suggesting that he is “fairly confident” parliament will approve the French Budget all factor into the uptick in EGBs seen in recent trade.
- Note that OATs have extended their outperformance vs. Bunds since Finance Minister Lescure spoke (10-Year OAT/Bund spread now 3bp tighter on the day), suggesting that has been more of a meaningful driver for EGBs than the pullback from highs in equities (this idea gains further credence as peripheral spreads have also tightened a little since the headlines crossed, as opposed to widening on the equity downtick).
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OPTIONS: Expiries for Oct14 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.1450(E537mln), $1.1500(E848mln), $1.1600(E663mln), $1.1650(E636mln)
- USD/JPY: Y151.50($691mln), Y152.00($751mln)
- AUD/USD: $0.6500(A$1.0bln), $0.6580-00(A$1.2bln)
- USD/CAD: C$1.4000-10($598mln)
SONIA OPTIONS: Call Spread vs Call
SFIG6 96.35/96.55cs vs SFIZ5 96.20c, bought the cs for 1 in 5k.
EQUITY TECHS: E-MINI S&P: (Z5) Corrective Pullback
- RES 4: 6850.87 1.618 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6831.38 2.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6819.25 1.500 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6705.18/6812.25 20-day EMA / High Sep 9
- PRICE: 6683.75 @ 14:54 BST Oct 13
- SUP 1: 6598.55 50-day EMA
- SUP 2: 6540.25 Low Sep 10 and a key short-term support
- SUP 3: 6506.50 Low Sep 5
- SUP 4: 6427.00 Low Sep 2
A sharp sell-off in S&P E-Minis on Friday is - for now - considered corrective. The contract has found support below the 50-day EMA, currently at 6598.55. Friday’s low of 6940.25 has been defined as a key short-term support. Note that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Sep 9 high. A breach of this hurdle would confirm a resumption of the uptrend.
