SECURITY: Risks Abound As US Tracks Russian-Flagged Tanker In North Atlantic

10-year Bund yields have pushed through the 2.80% figure to trade at the highest since March, now up over 3bps today. Hawkish repricing at the front-end has pulled yields higher across the curve, following a Bloomberg interview with ECB’s Schnabel and a solid German IP reading. Recent momentum suggests risks remain skewed in favour for further upside in yields. 

• The short-end driven nature of recent moves has allowed the German 5s30s curve to flatten away from multi-week highs, currently -1.3bps today at 101.4bps. On the domestic front, focus remains on Germany’s 2026 issuance plan, which we expect to be released next week.
• Bund futures are -40 ticks at 127.75, on track for a seventh consecutive negative session. A bear cycle remains intact, with next support at 127.57, a Fibonacci projection. Options flow across the curve has been clearly skewed towards further downside.
• 10-year EGB spreads to Bunds are biased up to 1bp wider, a function of fading ECB rate cut expectations and an uptick in EUR rates vol. The BTP/Bund spread nonetheless remains below 70bps.
• Schnabel noted that she was “rather comfortable” with market expectations that “the next rate move is going to be a hike, albeit not anytime soon”. Although not too surprising given her hawkish stance, the remarks are being interpreted as a further signal that another cut is unlikely, viewed alongside sticky (core) inflation data, improving PMIs and a stronger-than-expected Q3 compensation per employee reading.
• Meanwhile, German October industrial production was stronger-than-expected at 1.8% M/M (vs 0.3% cons and a downwardly revised 1.1% prior).
• This week’s Eurozone calendar is reasonably light, with broader global focus on Wednesday's FOMC decision.

2 block trades lodged in recent trade:

• 0QH6 96.375/96.25/96.125 put fly 6K blocked in total at 0.5 vs. 96.895 (5% delta), CME email points to a buyer of the wings.

Short-term gains in WTI futures appear corrective - for now. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. A resumption of the bear leg would open the key support and the bear trigger at $55.99, the Oct 20 low. Clearance of this level would resume the downtrend. Key short-term resistance to watch is $61.84, the Oct 24 high. A clear break of this hurdle would signal scope for a stronger correction. The trend needle in Gold continues to point north. The bear phase between Oct 20 and 28 appears to have been a correction and note that the recovery since Oct 28 signals the end of that corrective cycle. Key support to watch lies at the 50-day EMA, at $4031.1. Clearance of this EMA would signal scope for a deeper retracement. Sights are on key resistance and the bull trigger at $4381.5, the Oct 20 high.

• WTI Crude down $0.4 or -0.67% at $59.67
• Natural Gas down $0.2 or -3.8% at $5.087
• Gold spot up $11.02 or +0.26% at $4208.61
• Copper down $0.65 or -0.12% at $545.5
• Silver up $0.09 or +0.15% at $58.4193
• Platinum up $15.99 or +0.97% at $1659.2