BELGIUM AUCTION RESULTS: ORI Operation
Jul-04 10:08
| 4.00% Mar-32 OLO | 2.25% Jun-57 OLO | |
| ISIN | BE0000326356 | BE0000343526 |
| Amount | E186mln | E315mln |
| Previous | E248mln | E721mln |
| Avg yield | 2.698% | 4.002% |
| Previous | 2.870% | 3.422% |
| Bid-to-cover | 2.12x | 2.14x |
| Previous | 2.09x | 2.36x |
| Avg Price | 107.895 | 68.707 |
| Low Price | 107.89 | 68.66 |
| Pre-auction mid | 107.863 | 68.666 |
| Prev avg price | 108.744 | 77.161 |
| Prev low price | 108.70 | 77.10 |
| Prev mid-price | 108.791 | 76.744 |
| Previous date | 05-May-23 | 21-Oct-24 |
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FOREX: Global Carry Trades See Threat From Crowded Positioning, Return of Vol
Jun-04 09:51
- The sustained fade in G10 FX implied vol off the post-Liberation Day highs is helping provide a supportive backdrop for FX carry, and while the long-held status of JPY as a funding currency has ebbed since last year's intervention, other currencies have stepped in to take advantage of regional dislocations (most recently HKD and CNY), which are compensating for falling policy rates among traditional carry targets such as the MXN, AUD and others.
- BNY Mellon write that while there is little sign of market volatility picking up (meaning better risk-reward on carry trades) they believe conviction in these carry trades is not strong - and markets need to exercise greater caution amid an increasingly crowded strategy. They flag CHF, CNY and SEK low-yielding, funder currencies, all of which have large current account surpluses (which support a home investment bias in the context of US trade rebalancing), meaning the risk-reward profile for carry trades is likely to become structurally less attractive, tempering expectations around future returns.
- We see the sharp pull lower in local Hong Kong rates (both HIBOR and HKD funding rates) and the TWD spot rally has boosted the currency's status as an APAC funding currency, however persistent pressure on the weak-side of the FX trading band, a building 2025 IPO pipeline and improved corporate activity (bond sales, dividends) may mean pressured local rates are short-lived through the rest of 2025.
OUTLOOK: Price Signal Summary - Bull Cycle In EUROSTOXX 50 Still In Play
Jun-04 09:46
- In the equity space, the trend condition in S&P E-Minis is unchanged and remains bullish and the contract is trading just ahead of its recent high. A print above 5993.50 last week, the May 20 high and a bull trigger, highlights a resumption of the uptrend and maintains a price sequence of higher highs and higher lows. An extension would open 6057.00 next, the Mar 3 high. Key support lies at 5765.62, the 50-day EMA. First support lies at 5850.75, the 20-day EMA.
- The trend cycle in EUROSTOXX 50 futures remains bullish and a recent pullback appears corrective. Moving average studies are in a bull-mode position, highlighting a clear dominant uptrend. Sights are on 5516.00, the Mar 3 high and the key bull trigger. Clearance of this level would strengthen a bull theme. Key support to watch lies at 5262.93, the 50-day EMA.
BUNDS: Bund test session low, BTP/Bund Targets the 2021 low
Jun-04 09:41
- The underperformance in Bund Futures initially led by the longer end Germany and US Treasuries, has now moved the BTP/Bund spread from a small 0.6bp wider, to 0.6bp tighter.
- As noted this Week, it is worth watching how the spread develops, as risk remains to the downside.
- Further tightening bias would target the Psychological 90.00bps level, printed a 90.4bps low in 2021, its lowest since Mid March 2015.
- Barclays last Week, provided a new punchy forecast after moving their call from 90bps down to 70bps.
- Goldman are also seeing potential tightening risks, without providing a target level.
- Bund just tested the initial support noted at 130.94, printed a 130.94 just now, and below the latter, opens back to 130.72.
