OIL PRODUCTS: ARA oil product stockpiles according to Insights Global:

European FI stabilized Tuesday after two consecutive weak sessions, with Gilts modestly outperforming Bunds.

• Short-ends/bellies outperformed on regional curves in steepening moves (Germany's lightly twist steepening, the UK's bull steepening), as equities sold off overnight on China economic stimulus disappointment.
• The early rally faded, though no single factor was evident. In data, German industrial production growth surprised to the upside, a development we had flagged was possible yesterday.
• Bundesbank President Nagel said he was “open” to an October cut, with the noted hawk's comment serving to confirm market pricing for next week's decision (still over 90% implied of a 25bp cut).
• Periphery EGBs started on the back foot in line with the initial risk-off cross-asset move, but spreads tightened as equities recovered from session lows.
• Wednesday's docket includes German trade data, and ECB commentary from Villeroy and Elderson.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.9bps at 2.228%, 5-Yr is down 2bps at 2.103%, 10-Yr is down 1.3bps at 2.243%, and 30-Yr is up 0.2bps at 2.538%.
• UK: The 2-Yr yield is down 2.9bps at 4.194%, 5-Yr is down 3bps at 4.072%, 10-Yr is down 2.4bps at 4.184%, and 30-Yr is down 1.4bps at 4.716%.
• Italian BTP spread down 1.5bps at 130.1bps / Spanish down 1.7bps at 74.9bps

• RES 4: 1.3434 High Sep 26 and key resistance 
• RES 3: 1.3389 High Oct 1 
• RES 2: 1.3305 High Oct 2  and the bull trigger
• RES 1: 1.3217 20-day EMA
• PRICE: 1.3089 @ 17:01 BST Oct 8
• SUP 1: 1.3060 Low Oct 7
• SUP 2: 1.3049 50.0% retracement of the Aug 8 - Sep 25 bull leg 
• SUP 3: 1.3002 Low Sep 11 
• SUP 4: 1.2959 61.8% retracement of the Aug 8 - Sep 25 bull leg

GBPUSD maintains a softer short-term tone following last week’s sell-off, and the pair is trading at its lows. Cable has breached support at the 20-day EMA and pierced the 50-day EMA at 1.3112. A clear break of this average would strengthen a bearish threat and open 1.3049, a Fibonacci retracement. Clearance of this level would expose 1.3002, the Sep 11 low.  Initial resistance to watch is 1.3217, the 20-day EMA.         

RRP usage inches up to $325.355B this afternoon from $322.948B prior. Compares to $239.386B on Monday September 16 2024 -- the lowest level since early May 2021. Number of counterparties rises to 65 from 54.