BONDS: Reports Of Accidental Fire From Ukraine on Poland On Tuesday Apply Fresh Pressure
Fresh pressure creeps into the core global FI space on the back of an AP story which noted that "three U.S. officials said preliminary assessments suggested the missile was fired by Ukrainian forces at an incoming Russian one amid the crushing salvo against Ukraine’s electrical infrastructure Tuesday. The officials spoke on condition of anonymity because they were not authorized to discuss the matter publicly."
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AUSSIE BONDS: Rebounding From Lows
Aussie bond futures initially showed through their overnight session lows shortly after the Sydney re-open, as the impulse from Friday’s Gilt-driven cheapening, alongside an expected uptick in food price inflation owing to notable floods in food producing areas of Australia and PM Albanese outlining a A$9.6bn round of infrastructure spending, generated fresh pressure.
- That was before some hope surrounding a firmer fiscal footing in the UK provided a bit of a bid for the space, leaving the major cash ACGB benchmarks flat to 2bp cheaper across the curve ahead of the bell, as the 10- to 12-Year zone leads the weakness, while YM is unch. and XM is -2.0.
- A word of caution from Treasurer Chalmers re: the broader economic situation probably aided the rebound at the margin.
- Swaps have lagged the move in bonds, with the early narrowing of EFPs reverting to widening, led by 10s, as the 3-/10-Year EFP box steepens.
- Bills run 1-3bp cheaper across the curve, with RBA dated OIS pointing to a terminal rate of ~4.05%, little changed on the day.
- Tomorrow’s domestic docket is headlined by the minutes covering the latest RBA decision and an appearance RBA Deputy Governor Bullock, with her address on in front of the AFIA annual conference to be on the topic of “Policymaking at the Reserve Bank.”
LOOK AHEAD: Eurozone Timeline of key events (Times BST)
| Date | GMT/Local | Country | Event |
| 17-Oct | 0900 | IT | Italy Final HICP |
| 17-Oct | 0900 | EU | ECB de Guindos Speaks on Euro Anniversary |
| 17-Oct | 1600 | EU | ECB Lane at Bocconi Uni & Deutsche Bank Roundtable |
| 18-Oct | 0900 | IT | Trade Balance |
| 18-Oct | 1000 | DE | ZEW Survey |
| 18-Oct | 1700 | EU | ECB Schnabel Alumni Event at Uni Mannheim |
| 19-Oct | 1000 | EU | HICP (f) / Construction Production |
| 20-Oct | 0700 | DE | PPI |
| 20-Oct | 0745 | FR | Manufacturing Sentiment |
| 20-Oct | 0900 | EU | EZ Current Account |
| 21-Oct | 1500 | EU | Consumer Confidence Indicator (p) |
| 22-Oct | 1000 | EU | ECB Panetta at Festa dell'ottimismo |
BTP TECHS: (Z2) Trend Needle Points South
- RES 4: 119.06 High Sep 8 and a key resistance
- RES 3: 118.51 High Sep 13
- RES 2: 117.05 High Sep 22
- RES 1: 112.50/116.71 20-day EMA / High Oct 4
- PRICE: 109.78 @ Close Oct 14
- SUP 1: 108.85 Low Oct 11
- SUP 2: 108.13 Low Sep 28 and key support
- SUP 3: 107.27 2.382 proj of the Aug 25 - Sep 1 - 8 price swing
- SUP 4: 106.68 2.618 proj of the Aug 25 - Sep 1 - 8 price swing
The BTP futures trend condition remains bearish and last week’s extension reinforces this condition. The reversal from 116.71, the Oct 4 high, signals the end of the corrective phase between Sep 28 - Oct 4. A continuation lower would open the key support and bear trigger at 108.13, the Sep 28 low. A break of this level would confirm a resumption of the broader downtrend. 116.71 marks the key resistance.
