EGBS: Passing of Supply and Equity Pullback Helps Bunds Off Lows
Jul-17 09:33
Smooth digestion of today’s Spanish and French nominal supply alongside a pullback in European equity futures has helped Bunds away from session lows. However, RXU5 remains -2 ticks today at 129.60, with a bearish technical theme still intact. Initial support to watch is 129.08, the Jul 14 low.
- Overnight weakness came alongside US Treasuries, following some hawkish leaning commentary from NY Fed President Williams.
- German yields are up to 1.5bps higher, displaying a light steepening bias. 30-year yields found support at the October 2023 highs (3.263%) earlier this week, and this level remains a key resistance to watch.
- 10-year EGB spreads to Bunds are biased up to 1bp wider, with PGBs and OATs underperforming.
- Yesterday evening, Germany rejected the EU’s E2trln budget proposal for 2028-2034, just hours after it was announced. While Germany is traditionally a fiscal hawk, it presents some tension with Chancellor Merz’s plans to significantly increase domestic fiscal capacity over that time period. Nonetheless, the FT has reported significant infighting amongst EU members as negotiations around the EU budget begin in earnest.
- The FT also reported that the EU is preparing a list of potential tariffs on US services. The MNI Policy Teams latest exclusive has examined the increasing support around retaliation.
- Eurozone final June HICP confirmed flash estimates, with core at 2.3% Y/Y.
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FOREX: JPY Looks Through Slowing of Cuts to Bond Buys, GBP Sold on Rallies
Jun-17 09:31
- The Bank of Japan rate decision came in broadly as expected, and while signals were given over a slower pace of cuts to their bond-buying program, this meant little to the JPY currency, which remains inside the recent range. Spot remains below last week’s high. Recent weakness suggests the correction between Jun 3 - 11, is over. The trend direction is down - moving average studies are in a clear bear-mode position, highlighting a dominant downtrend.
- GBP trades poorly, and is fading against all others in G10. As a result, GBP/USD has again struggled to hold gains above 1.36 and is on the backfoot. As such, the sell-on-rallies theme remains dominant. The outlook will deteriorate on any break and close below 1.3456, which would signal the first phase of a corrective pullback. 1.3371, the 50-dma, and 1.3270 are the first downside targets here. UK CPI prints early Wednesday ahead of the BoE rate decision on Thursday.
- In the crosses, NZDJPY is threatening to break above 87.95, which would be the highest close since January, placing the focus on the year’s highs at 89.71. For AUDNZD, spot has been consolidating in a 1.0750/1.0800 range, however MA studies do highlight bearish momentum. A sustained break above 1.0825 would be required to alter this trend.
- The US retail sales print for May is next up, with markets on watch for a slowdown in the advance retail sales headline to -0.6% from +0.1% prior. Import and export price indices will be released alongside. ECB's Villeroy and Centeno are set to speak, while the Fed remain inside their pre-rate decision media blackout period.
US: Trump on Iran Peace Talks
Jun-17 09:21
Donald J. Trump
@realDonaldTrump
I have not reached out to Iran for “Peace Talks” in any way, shape, or form. This is just more HIGHLY FABRICATED, FAKE NEWS! If they want to talk, they know how to reach me. They should have taken the deal that was on the table - Would have saved a lot of lives!!!
EQUITIES: Credit Agricole Option Vol Trade
Jun-17 09:20
Credit Agricole longer Dated Vol Trade:
- XCA (20/03/26) 16^, bought for 2.48 in 3.96k.
