PLN: POLGB Auction, Flash October CPI Eyed This Week

MONTH END EXTENSION: Wouldn't expect too much of a late bid in Govies Tuesday, at least shouldn't be Month End related. The EU stands out, but these are still on the Small/Average side.

Bloomberg Bonds:

• US Tsys: +0.06yr (small).
• EU Govies: +0.08yr (average).
• UK Govies: 0.00yr (non event).

MS Bonds:

• US Tsys: +0.03yr (tiny).
• EU Govies: +0.07yr (average).
• UK Govies: -0.02yr (non event).

Barclays FX:

• Barclays: Their passive Month-End and Quarter-End rebalancing model shows moderate USD selling against all majors.

• In the equity space, a bull cycle in S&P E-Minis remains intact. Key short-term resistance has been defined at 6756.75, the Sep 22 high where a break would resume the primary uptrend. This would open 6787.63, the 1.382 projection of the Aug 1 - 15 - 20 price swing. On the downside, the contract has recently pierced initial support at the 20-day EMA, currently at 6640.59. A clear breach of this average would signal scope for a deeper retracement, potentially towards the 50-day EMA, at 6526.11.
• EUROSTOXX 50 futures have started the week on a bullish note. Today’s gains have resulted in a breach of key resistance and the bull trigger at 5525.00, the Aug 22 high. The break confirms a resumption of the uptrend and paves the way for a climb towards 5564.82, a 0.764 projection of the Aug 1 - 22 - Sep 2 price swing. Initial firm support lies at 5433.67, the 20-day EMA.

Gilts have rallied alongside global core FI peers to start the week, with U.S. government shutdown risk in focus (despite the equity uptick).

• Lower crude oil prices provide some background support as well.
• Futures traded as high as 90.82 before easing back to ~90.70.
• The bearish technical structure in the contract remains evident, with initial support and resistance located at 90.26 & 91.28, respectively.
• Yields 1.5-3.0bp lower, curve flatter.
• Chancellor Reeves has spoken with several local media outlets before her ~12:00 London address at the Labour Party conference.
• Reeves reiterated the government’s election pledge not to lift the 3 major taxes, while pushing back against the idea of a wealth tax.
• The UK’s ongoing fiscal deterioration is well-documented (limiting gilt rallies and keeping bearish/steepener technical setups in place), as such, pre-Budget comms from Reeves are set to provide the focal point of her address.
• Elsewhere, BBG sources have suggested that Reeves “is debating whether to get rid of the Office for Budget Responsibility’s annual March outlook to strengthen her commitment to holding just a single fiscal event a year and bring greater stability to economic policy making”.
• SONIA futures -1.0 to +2.0, strip twist flattens.
• BoE-dated OIS little changed, showing 4.5bp of easing through year-end and fully discounting the next cut through the end of the April MPC.
• BoE Deputy Governor Ramsden is set to speak from 13:00 London. We view him as the most dovish MPC member that didn’t vote for a rate cut earlier this month.