DUTCH T-BILL AUCTION PREVIEW: On offer next week

FVQ5 108.00 puts paper paid 0-08 on ~9.2K.

• In the equity space, the trend condition in S&P E-Minis is unchanged, it remains bullish and the contract has started this week on a firm note. Short-term resistance and a bull trigger at 6128.75, the Jun 11 high, has recently been breached. The clear break confirms a resumption of the uptrend that started Apr 7. The 6200.00 handle has been cleared too, this opens 6277.50, Feb 21 high and bull trigger. Key support is at the 50-day EMA - at 5952.84. First support lies at 6069.53, the 20- day EMA.
• Trend signals in EUROSTOXX 50 futures remain bearish, however, the recovery from last Monday’s low appears to be a reversal and the contract is holding on to its most recent gains. Price has traded through the 20- and 50-day EMAs. A clear break of both averages would strengthen a reversal theme. This would open 5486.00, the May 20 high and a bull trigger. On the downside, a breach of 5194.00, the Jun 23 low would reinstate a bearish theme.

The German 2s10s curve is little changed on the session, while 10s30s has bull steepened 1bp to 48.4bps. German yields fell after state-level flash June inflation data was softer-than-expected, but the move has since faded.

• Bund futures are +20 ticks at 130.32, off earlier highs of 130.52 with resistance at 130.68 (20-day EMA) untested.
• MNI tracks downside risks to the 2.2% Y/Y German CPI consensus following this morning’s state-level data. Meanwhile, Italian flash HICP inflation was 1.7% Y/Y (vs 1.8% prior).
• The 10-year BTP/Bund spread opened at a fresh multi-year low of ~87bps this morning, but has moved back to 88bps with European equity futures off highs.  On a 4Q rolling sum basis, the Italian budget deficit ticked up a tenth to 3.5% of nominal GDP in Q1 – far less dramatic than the 8.5% single-quarter figure reported by newswires.
• The ECB’s updated strategy review brought few surprises. A 2% symmetric target was re-iterated, which requires “appropriately forceful or persistent policy response to large, sustained deviations of inflation from target in either direction”.
• Eurozone May money supply growth was slightly weaker than expected at 3.9% Y/Y (vs 4.0% cons, 3.9% prior).
• The ECB's annual forum on Central Banking in Sintra, Portugal, kicks off today. The theme of this year's discussions is "Adapting to change: macroeconomic shifts and policy responses". For the ECB, expectations for meaningful guidance changes are not that high.