OUTLOOK: Price Signal Summary - S&P E-Minis Trend Needle Points North

The latest Bank of America fund manager survey suggested that funds remain underweight global equities (although this narrowed to a net 2% underweight from 13% the month prior) and bonds (net underweight 5% vs. 1% the month prior), while they remain overweight cash (net 16% overweight vs. 26% the month prior).

• The survey details point to a continued hesitance to redeploy assets in the U.S.
• A net 61% of investors surveyed suggest that the USD is overvalued vs. 57% last month. Bank of America note that the current USD valuation is 1.5 standard deviations above the long-term average, based on a trade weighted index.
• Investors responding to the survey are a net 36% underweight U.S. equities vs. 38% last month. The current allocation is 1.7 standard deviations below the long-term average.
• Note that the survey took place between June 6-12, before the surge in geopolitical risk in the Middle East.

• In the equity space, the trend condition in S&P E-Minis is unchanged, it remains bullish and the contract traded to a fresh cycle high last Wednesday, reinforcing current bullish conditions. For now, the most recent pullback is considered corrective. The contract has pierced support at 6000.18, the 20-day EMA. A clear breach of this average would expose the 50-day EMA, at 5890.99. Key short-term resistance and the bull trigger, has been defined at 6128.75, the Jun 11 high.
• The latest pullback in the EUROSTOXX 50 futures contract has resulted in a breach of the 50-day EMA at 5299.04. Price has also pierced 5255.00, the May 23 low. A clear break of both support points would signal a short-term top and highlight scope for a deeper retracement. This would open 5178.00, the May 6 low and 5081.16, 38.2% of the Apr 7 - May 20 bull leg. Initial resistance to watch is 5363.03, the 20-day EMA.

• Spread set at MS+73bps (guidance was MS + 75bps area)
• HR: 88% vs 4.25% Jul-39 Bund (DE0001135325)
• Tap Size set earlier: E5bln (WNG) (the bottom of the E5-9bln range MNI expected)
• Final books in excess of E93bln (inc E5.9bln JLM interest)
• ISIN: EU000A3LZ0X9 (immediately fungible)
• JLMs: BofA (DM/B&D) / GSBE SE / NatWest / SG / UBS
• Timing: Hedge deadline 11:10BST / 12:10CET. Pricing later today