EM CEEMEA CREDIT: PEOPW: Pekao EU500m 6NC5 SNP MS+175A - Guidance

• In the FI space, Bund futures continue to trade just below their recent highs. A bull cycle remains in play and the pullback between Apr 7 - 9 is considered corrective. Attention is on resistance at 132.03, the Apr 7 high and a bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 132.56, the Feb 28 high. Firm support lies at 130.64, the 20-day EMA.
• Gilt futures traded higher last week. The climb marks an extension of the recovery that started Apr 9 and the rally cancels a recent bearish theme. 92.63, the Apr 8 high, has been breached, exposing 93.44, the 76.4% retracement of the Apr 7-9 sell-off. A break of this level would strengthen the current bull cycle and expose 94.50, the Apr 7 high and a key resistance. Support to watch is 92.22, the 20-day EMA.

RXM5 130/129 put spread, paper pays 23 in 5.9k

While the impacts of the Spanish & Portuguese energy blackout continue to be felt across both countries - the ramifications for markets have been pretty limited so far beyond some modest weakness in both the IBEX-35 and the PSI-20.

• We're monitoring headlines that all trains have been stopped with no departures, subways and traffic lights have been impacted and the effects are pretty nationwide. That said, Spain's network operator has activated emergency plans to restore supply - but there's no indication on when the blackout will be fully reversed.
• Spanish bond markets and the EUR are broadly unaffected, but are off the better levels of the European morning - a swift resolution here would have very limited read-through for the economy, however protracted problems here could begin to cause issues for markets should industry and transport suffer prolonged or repeat blackouts.