US 10YR FUTURE TECHS: Outlook Remains Bullish
- RES 4: 117-00 61.8% of the Aug - Oct 2022 bear leg (cont)
- RES 3: 116-28+ High Jan 19 and key resistance
- RES 2: 116-08 High Feb 2
- RES 1: 116-01 High Mar 16
- PRICE: 114-12+ @ 10:16 GMT Mar 17
- SUP 1: 113-28 38.2% retracement of the rally from Mar 2 (cont)
- SUP 2: 113-06+ 50-day EMA
- SUP 3: 112-27 20-day EMA
- SUP 4: 112-17+ 61.8% retracement of the rally from Mar 2 (cont)
Treasury futures failed to hold on to yesterday’s high of 116-01. Despite the pullback, a bullish short-term outlook remains intact. Key support to watch lies at 113-06+, the 50-day EMA and this level also represent a short-term pivot level. A break of yesterday’s high would open 116-08, the Feb 2 high and 116-28+, the Jan 19 high and a key resistance. On the downside, a clear breach of the 50-day EMA would expose 112-21, the Mar 13 low.
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BONDS: Gilts Outperforming Ahead Of A Busy US Data Session
Gilts are outperforming German and US counterparts in early Wednesday trade.
- UK yields reversed most of Tuesday's rise on a slowdown in core UK CPI data out this morning, which was driven by a slowdown in service inflation.
- This lessened conviction in a 25bp March BoE hike (92% priced vs 100% yest) and pulled down terminal rate pricing by around 15bp.
- The short-end / belly-led UK bull steepening underpinned strength in Bunds and to a lesser extent, Treasuries.
- A busy US data session ahead: though of lesser importance than yesterday's CPI reading, Feb Empire Manufacturing and Jan Retail Sales are the next key data points, followed by Industrial Production and the NAHB housing index.
- ECB's Lagarde speaks at 0900ET/1400GMT.
- In supply, in the US we get $15B 20Y Bond auction, with a German auction up shortly and ongoing Slovak and Belgian syndications today.
Latest levels:
- Mar 10-Yr US Tsy futures (TY) up 7/32 at 112-17.5 (L: 112-10.5 / H: 112-18)
- Mar Bund futures (RX) up 35 ticks at 135.56 (L: 135.15 / H: 135.6)
- Mar Gilt futures (G) up 97 ticks at 103.87 (L: 103.3 / H: 103.92)
- Italy / German 10-Yr spread 0.5bps wider at 179.1bps
EGB SYNDICATION: Slovakia 12/20y: Updated guidance
12-year: 23 February 2035:
- Guidance revised to MS+85bp+/-5bp WPIR (from initial MS+95bp area)
- Books in excess of E4.6bln inc JLM interest
- ISIN: SK4000022539
- Benchmark: 0.75% Jul-34 Bund
20-year: 23 February 2043
- Guidance revised to MS+125bp area (from initial MS+130bp area)
- ISIN: SK4000022547
- Benchmark: 3.25% Jul-42 Bund
For both
- Settlement: 23 February, 2023
- Bookrunners: Barclays, DB (B&D), SLVSPR, TATRAB, VUBSK
Via Bloomberg
SCOTLAND: Sturgeon To Resign As First Minister
Scotland's First Minister Nicola Sturgeon is set to resign from office. BBC: "The Scottish National Party leader is expected to make the announcement at a hastily-arranged news conference in Edinburgh.
It is not clear exactly when she will leave office." Due to speak at 1100GMT (0600ET, 1200CET).
- Sturgeon has served as first minister since 2014. Recent polling has shown dissatisfaction with her left-wing populist pro-independence Scottish National Party (SNP)'s handling of the devolved govt' departments it controls, with healthcare shown as the most pressing issue for respondents above independence in one recent poll.
- Sturgeon has proved a divisive leader, gaining ire from opponents who argue she put the fight for Scottish independence above the effective day-to-day running of gov't, while winning plaudits from nationalists and unionists for her effective communication technique.
- Betting markets see former SNP Westminster leader Angus Robertson as favourite to take over, although the market remains relatively illiquid at present.
Source: Smarkets
