OUTLOOK: Price Signal Summary - Bear Threat In Gilts Remains Present

Apr-04 11:37
  • In the FI space, Bund futures maintain a softer short-term tone. A deeper retracement would highlight a stronger bearish threat and the end of the recent corrective phase between Mar 18 - 27. The bear trigger lies at 131.23, the Feb 29 low. Clearance of this level would confirm a resumption of the downtrend that started last December. On the upside, a break of 133.48, the Mar 27 high, is required to reinstate a bullish theme.
  • The gap lower on Tuesday in Gilt futures and the subsequent sell-off, highlights a developing bear threat. A continuation lower would signal scope for a test of key short-term support at 98.05, the Mar 15 low. Clearance of this level would strengthen a bearish theme. On the upside, key resistance and the bull trigger is unchanged at 100.37, the Mar 12 high. Initial resistance is at 99.332, the Apr 2 high.

Historical bullets

EUROZONE ISSUANCE: 3-month ESM Bills Results

Mar-05 11:33
Type 3-month bills
Maturity Jun 6, 2024
Amount E1.05bln
Target E1.1bln
Previous E1.057bln
Avg yield 3.818%
Previous 3.802%
Bid-to-cover 2.49x
Previous 2.49x
Previous date Feb 06, 2024

STIR: Fed Rate Path Starts Day Lower Ahead Of ISM Services

Mar-05 11:26
  • Fed Funds implied rates have dipped 0-2bps overnight, pulling back off yesterday’s highs that had come close to recovering to levels seen shortly before Friday’s ISM mfg miss. European data were mixed rather than outright dovish.
  • Cumulative cuts: 0.5bp Mar, 5.5bp May, 21bp Jun, 35bp Jul and 86bp Dec.
  • The more heavily weighted ISM services index follows today.
  • Today’s scheduled Fedspeak is limited to VC Supervision Barr (voter) on financial matters. Potential for surprise appearances like we saw yesterday with Bostic talking on fears of triggering pent-up exuberance, but Powell’s House testimony tomorrow looms large.

US 10YR FUTURE TECHS: (M4) Approaching Resistance At The 50-Day EMA

Mar-05 11:20
  • RES 4: 111-24+ High Feb 13
  • RES 3: 111-11+ 38.2% retracement of the Feb 1 - 23 bear leg
  • RES 2: 111-06 50-day EMA
  • RES 1: 111-02 High Mar 1
  • PRICE: 110-31+ @ 11:08 GMT Mar 5
  • SUP 1: 110-05+/109-25+ Low Mar 1 / Low Feb 23 and bear trigger
  • SUP 2: 109-14+ Low Nov 28
  • SUP 3: 109-12+ 1.764 proj of Dec 27 - Jan 19 - Feb 1 price swing
  • SUP 4: 108-25+ 2.00 proj of Dec 27 - Jan 19 - Feb 1 price swing

The trend direction in Treasuries is unchanged and remains down, however, the contract is holding on to its recent gains. Attention is on resistance at 111-06, the 50-day EMA, where a clear break is required to signal a possible reversal. This would open 111-11+, 38.2% of the Feb 1 - 23 bear leg. On the downside, the bear trigger has been defined at 109-25+, the Feb 23 low. A break would resume the downtrend and open 109-14+, the Nov 28 low.