US TSY FUTURES: Roll pace update

• RES 4: 116.71 High Oct 4 and key resistance
• RES 3: 115.70 High Oct 5
• RES 2: 114.51 3.0% 10-dma envelope
• RES 1: 114.29 High Oct 26
• PRICE: 113.73 @ 08:29 BST Oct 26
• SUP 1: 108.82 Low Oct 21
• 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 short-term gains are considered corrective for now. The reversal from 116.71, Oct 4 high, signals the end of the Sep 28 - Oct 4 corrective cycle. A resumption of weakness would open the key support and bear trigger at 108.13, Sep 28 low. Clearance of this level would confirm a resumption of the broader downtrend. 116.71 marks the key resistance.

Bunds fail to sustain the break of resistance at 138.52, reversing earlier gains and decoupling from the stronger EUR (hitting parity w USD for first time since mid-Sep). (We noted yesterday that the correlation between the USD and Bunds is as high as it's ever been).

• The German curve is bear flattening a little more as Schatz yields hit session highs, with ECB terminal rate pricing marginally higher (2.85% peak in Jul 2023, up 1bp).

Source: BBG, MNI

• RES 4: 106.25 High Sep 12
• RES 3: 105.34 High Sep 22
• RES 2: 103.60 Low Sep 20
• RES 1: 102.45 High Sep 23
• PRICE: 101.47 @ 08:26 BST Oct 26
• SUP 1: 97.80/95.82 20-day EMA / Low Oct 21
• SUP 2: 94.82/92.66 Low Oct 17 / 14
• SUP 3: 90.99/90.38 Low Sep 28 / Low Oct 12 and the bear trigger
• SUP 4: 90.00 Psychological round number

Gilt futures are holding the bulk of recent gains, confirming the extension of the current bull cycle. Price has recently cleared the 20-day EMA and the continuation higher this week has resulted in a break of key resistance at 100.92, the Oct 4 high. The breach of this level strengthens bullish conditions and opens 102.45 next, the Sep 23 high. Initial firm support has been defined at 95.82, the Oct 21 low.