FRANCE T-BILL AUCTION PREVIEW: On offer next week

The trend condition in WTI futures is unchanged - a bear cycle remains intact and short-term gains are considered corrective. The pullback from the Sep 2 high highlights a possible reversal and the end of a corrective phase between Aug 13 - Sep 2. Initial resistance to watch is $65.43, the Sep 2 high. Key short-term resistance has been defined at $68.43, the Jul 30 high. A stronger resumption of weakness would open $57.50, the May 30 low. Gold is in a clear bull cycle and shallow short-term pullbacks remain corrective. A fresh all-time high once again, yesterday, confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is the $3800.0 handle. Initial firm support lies at $3610.2, the 20-day EMA. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend.

• WTI Crude down $0.12 or -0.19% at $63.28
• Natural Gas down $0.02 or -0.81% at $2.83
• Gold spot up $6.72 or +0.18% at $3770.47
• Copper down $1.75 or -0.38% at $462.7
• Silver up $0.12 or +0.27% at $44.1487
• Platinum down $5.16 or -0.35% at $1472

Eurostoxx 50 futures are trading closer to their recent highs. The contract recently cleared resistance around the 20-day EMA - a bullish development - and the subsequent rally reinforces a bullish theme. The move signals potential for a climb towards 5525.00, the Aug 22 high and a bull trigger. On the downside, key support to monitor is 5302.00, the Sep 2 low. Clearance of this level is required to reinstate a bearish theme. A bull cycle in S&P E-Minis remains intact and the contract traded to a fresh cycle high on Monday. Price has recently breached the 6700.00 handle and this signals scope for an extension towards 6787.63, a Fibonacci projection point. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Initial support to watch lies at 6625.74, the 20-day EMA.

• Japan's NIKKEI closed higher by 136.65 pts or +0.3% at 45630.31 and the TOPIX ended 7.28 pts higher or +0.23% at 3170.45.
• Elsewhere, in China the SHANGHAI closed higher by 31.809 pts or +0.83% at 3853.642 and the HANG SENG ended 359.53 pts higher or +1.37% at 26518.65.
• Across Europe, Germany's DAX trades lower by 15.08 pts or -0.06% at 23596.25, FTSE 100 lower by 16.82 pts or -0.18% at 9206.49, CAC 40 down 9.72 pts or -0.12% at 7862.3 and Euro Stoxx 50 down 2.79 pts or -0.05% at 5469.6.
• Dow Jones mini down 0 pts or 0% at 46637, S&P 500 mini up 8.25 pts or +0.12% at 6723.25, NASDAQ mini up 62.25 pts or +0.25% at 24890.5.

10-year EGB spreads to Bunds are up to 1.5bps wider on the session, with BTPs lightly underperforming (spread to Bunds at ~81bps). Concerns around President Trump’s remarks on the Russia-Ukraine conflict yesterday and Russia pointing to further advances in Ukraine this morning may be contributing to peripheral underperformance versus Bunds intraday.

• The BTP/Bund spread has tightened almost 40bps year-to-date, but has struggled to consolidate below the 2010 lows of ~76bps in recent weeks.
• BTP futures are +8 ticks at 119.75, lightly underperforming Bunds (+18 ticks at 128.36). The primary trend condition in BTP futures remains bullish, with the pullback from the Sep 11 considered corrective. Initial support is the Sep 4 low at 119.06, with key support at the Sep 3 low of 118.36.
• Italian short-end (and linker) supply is due at 1000BST, with E2.0-2.5bln of the on-the-run 2.10% Aug-27 BTP Short Term on offer.
• This BTP Short Term was last re-opened in August, where it attracted a 1.56x bid-to-cover ratio for the E3bln on offer.
• The Italian curve is lightly bear flatter ahead of the supply, with 2-year yields little changed and 30-year yields down almost 1bp.