BONDS: Off Early Highs
Dec-03 10:30
Core global FI markets have eased from early session highs, with firmer-than-expected services PMI data out of Europe & the UK noted.
- Bund futures +4 at 128.57. Initial support and resistance located at 128.12 & 128.72.
- German yields little changed to 1bp higher, curve marginally steeper.
- The 10-Year BTP/Bund spread threatens to break below 70bp, a level that has not been closed below since January ’10. Firmer than-expected Italian PMI data has factored into BTP outperformance.
- OATs hold yesterday’s widening.
- Gilt futures briefly rallied more than 60 ticks from yesterday’s low, topping out at 91.50 before fading back to ~91.30 last, still ~15 ticks higher on the day.
- Bulls remain in technical control, with our technical analyst deeming the recent pullback to be corrective. Initial support and resistance in the contract remain located at 90.87 & 91.93, respectively.
- Yields 1bp higher to 1bp lower, front end underperformed into the GBP4.75bln 4.00% May-29 gilt auction, which ultimately provided average results.
- SONIA futures within 1bp of yesterday’s closing levels, BoE-dated OIS still pricing over 80% odds of a rate cut later this month.
- Comments from ECB’s Lagarde, Lane & Dolenc are due today, with BoE’s Mann also due to speak (albeit with a focus on reserve currencies as opposed to outright monetary policy matters).
- U.S. ADP employment and ISM services data headline the macro calendar today.
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EUROPEAN INFLATION: MNI Inflation Insight: Services Beat, Travel At Play?
Nov-03 10:28
- We have published and e-mailed to subscribers the MNI Eurozone Inflation Insight.
- Please find the full report here: https://media.marketnews.com/Oct2025_EZCPI_Review_a8c2d28cbb.pdf
- Eurozone HICP inflation was as expected in the flash October release but core HICP surprised a little stronger with a Y/Y rate showing no moderation from September.
- Services inflation ticked higher although country-level data hint at volatile travel-related categories at play.
- The full October release on Nov 19 will provide a more useful update on exact drivers.
- By major country, Germany, Spain and Netherlands were all stronger than expected, France was in line and Italy saw a sizeable downside miss.
- The ECB is still seen being unlikely to cut at the next meeting in December (1-2bp priced) but with some sources warning that it could see more a lively discussion than some are expecting.
EURUSD TECHS: Bear Leg Extends
Nov-03 10:26
- RES 4: 1.1820 High Sep 23
- RES 3: 1.1775 61.8% retracement of the Sep 17 - Oct 9 bear leg
- RES 2: 1.1669/1728 High Oct 28and key resistance / High Oct 17
- RES 1: 1.1577 Low Oct 22
- PRICE: 1.1518 @ 10:25 GMT Nov 3
- SUP 1: 1.1508 Intraday low
- SUP 2: 1.1460 1.382 proj of the Oct 17 - 22 - 28 price swing
- SUP 3: 1.1392 Low Aug 1 and bear trigger
- SUP 4: 1.1313 Low May 30
EURUSD is trading lower today, as the current bear leg extends. The pair last Friday breached an important support at 1.1542, the Oct 9 low. This confirms a resumption of the current downtrend. Note that 1.1516, the 76.4% retracement of the Aug 1 - Sep 17 bull leg, has been pierced. A clear break of this level would expose key support at 1.1392, the Aug 1 low. Resistance to watch is 1.1669, the Oct 17 high.
EQUITY OPTIONS: Large Lloyds Option Block trade
Nov-03 10:21
Large Lloyds Option Block trade, unconfirmed buyer:
- LLOY (19th Dec) 92c, blocked at 2.5 in 10k.
