FINLAND AUCTION RESULTS: ORI Operation

• The Dollar is now back to closer to flat against G10s on the Day, the SEK is still down 0.28%, but similar to other Currencies it is paring losses versus the Greenback.
• Both the EUR and the Pound are slowly edging back towards their respective overnight highs.
• Initial resistance in Cable moves down to 1.3380.

• In the equity space, the trend set-up S&P E-Minis is unchanged and remains bullish. Recent cycle highs confirm a resumption of the uptrend. Sights are on 6477.31,1.618 projection of the May 23 - Jun 11 - 23 price swing. Key support is at the 50-day EMA, at 6163.71. Support at the 20-day EMA is at 6313.51.
• The trend condition in EUROSTOXX 50 futures remains bullish and short-term weakness for now, appears corrective. Support at 5281.00, the Jul 1 / 4 low, remains intact. A clear break of this level would strengthen a bearish threat. For bulls, a resumption of gains would refocus attention on key resistance and the bull trigger at 5486.00, the May 20 high. A clear breach of it would resume the bull cycle and open 5500.00.

The 10-year Gilt/Bund spread is little changed at 196bps, with yields drifting away from earlier highs. The 200bps handle, which was pierced on July 23, presents the main area of resistance for the spread.

• This morning’s headline flow has been relatively light, with markets still digesting the weekend trade deal between the US and the EU, as well as looking ahead to key data releases/events later this week.
• German yields are 0.5 to 1.5bps higher, with the belly lightly underperforming as a result of this morning’s E4.5bln Bobl supply (results were acceptable).
• The Gilt curve sees a more discernible bear steepening, with yields flat to 1bp higher. The front-end has been more supported by a strong 3-year Gilt auction. Note that in GBP STIRs, dovish call spread structures have been favoured this morning.
• Bund futures are -15 ticks at 129.58. A hammer candle formation on Jul 25 followed by a bullish engulfing candle yesterday signals a potential reversal of the recent downtrend. Initial resistance to watch is 129.95, the 20-day EMA.
• Initial support in Gilt futures was pierced earlier (session low of 91.16, just below the Jul 24 low at 91.18), but the contract has recovered to 91.40, -4 ticks today.
• UK consumer credit data for June was slightly stronger-than-expected, as was Spanish Q2 flash GDP. Focus remains on tomorrow’s Q2 GDP prints, the Eurozone July flash inflation round, and this week’s US events (Fed, Refunding, NFPs).