SONIA: Put spread seller

Core global FI markets have found a bit of a base in the last couple of hours.

• That leaves Bund futures -14 at 130.85 (130.64-91 range), with the modest opening gap lower not closed.
• The bearish technical picture remains intact in the contract. Initial meaningful support at the 1.236 projection of the Mar 8-18-27 price swing (130.25), while initial resistance comes in at the 20-day EMA (131.97).
• Initial pressure for Bunds and wider core global bonds seemed to stem from Asia’s reaction to Friday’s core global FI moves, a lack of weekend escalation in geopolitical tensions and U.S. fiscal support for Ukraine.
• BTP futures see some modest outperformance vs. Bunds after S&P chose not to act on the recent fiscal headwinds seen in Italy after hours on Friday
• Elsewhere on the ratings front, GGBs may receive some tailwinds early today, following S&P moving Greece to a positive outlook after hours on Friday.
• Weekend ECB speak didn’t move the needle, as flagged in early EUR STIR bullet.
• Comments from ECB President Lagarde and a couple of appearances from Villeroy are due today.
• On the supply front, the EU could launch its latest syndication as early today. Some desks eye a dual-tranche format including a long bond, while we don’t have much in the way of strong conviction re: potential bonds on offer.
• Elsewhere, we have flagged the potential for syndications from Austria, Finland, France, Greece, Portugal and Spain during this week.

• RES 4: 0.6644 High Apr 9
• RES 3: 0.6532 50-day EMA
• RES 2: 0.6498 20-day EMA
• RES 1: 0.6457 LHigh Apr 18
• PRICE: 0.6436 @ 07:29 BST Apr 22
• SUP 1: 0.6363 Low Apr 19
• SUP 2: 0.6339 Low Nov 10 and a key support
• SUP 3: 0.6315 Low Oct 31 ‘23
• SUP 4: 0.6270 Low Oct 26 ‘23 and a key support

The trend condition in AUDUSD remains bearish and the pair is trading closer to its recent lows. Key support at 0.6443, the Feb 13 low, has recently been cleared highlighting an important technical breach that confirms a resumption of the downtrend that started late December last year. Scope is seen for an extension towards 0.6339, the Nov 10 ‘23 low. Firm resistance is seen at 0.6532, the 50-day EMA. Short-term gains would be considered corrective.

• RES 4: 5400.00 Round number resistance
• RES 3: 5285.00/5333.50 High Apr 10 / 1 and the bull trigger
• RES 2: 5164.38 20-day EMA
• RES 1: 5095.25/5141.21 High Apr 18 / 50-day EMA
• PRICE: 5027.250 @ 07:10 BST Apr 22
• SUP 1: 4963.50 Low Apr 19
• SUP 2: 4907.57 50.0% retracement of the Oct 27 ‘23 - Apr 1 bull leg
• SUP 3: 4863.75 Low Jan 19
• SUP 4: 4799.50 Low Jan 17

The short-term trend condition in S&P E-Minis is unchanged and remains bearish. Friday’s extension reinforces current short-term conditions. The contract has cleared support at the 50-day EMA, signalling scope for a continuation lower near-term. Sights are on 4907.57 next, a Fibonacci retracement. Firm resistance is seen at 5164.38, the 20-day EMA. A clear break of the average would signal a possible reversal.