EM CEEMEA CREDIT: Romania: Aug Indus. Prod'n

• The German Bund saw a small gap lower on the Open, but this has been close to keep the contract in a very tight 16 ticks range going into the Cash Open.
• The early focus will on the French OAT following the Fitch downgrade, OATZ5 has gapped from 121.71 to 121.62 on the Open, but remains short of the initial support seen at 121.15.
• The OAT/Bund spread will be wider when Yields are Quoted.
• For the German Bund, initial resistance moves down to 128.84, followed by the 129.13 gap.
• Immediate support is near the session low, at 128.51, followed by 128.25.
• It is a lighter Week on the Data front, UK employment and CPI will be at the forefront, but the main focus will be on the FOMC and the widely expected 25bps cut.
• Global Investors will look to roll, close or square Equity Positions ahead of triple witching Friday.
• SPEAKERS: ECB Schnabel, Lagarde.

• RES 4: 92.30 High Aug 7
• RES 3: 92.06 High Aug 14      
• RES 2: 92.00 Round number resistance
• RES 1: 91.82 High Sep 11
• PRICE: 91.24 @ Close Sep 12
• SUP 1: 90.65 Low Sep 2
• SUP 2: 90.31/89.36 Low Sep 4 / 3
• SUP 3: 89.22 1.618 proj of the Aug 21 - 27 - 28 price swing 
• SUP 4: 89.00 Round number support   

A bull cycle in Gilt futures remains in play - a recent rally highlights a stronger corrective cycle and the contract is holding on to its gains. The move higher is allowing an oversold trend condition to unwind. Price has breached initial firm resistance at 90.84, the Aug 28 and 29 high. A continuation higher would signal scope for a climb towards 92.06, the Aug 14 high. On the downside, initial support lies at 90.65, the Sep 5 low.

• Spain will come to the market on Thursday to hold a Bono/Obli auction. On offer will be the on-the-run 3-year 2.40% May-28 Bono (ISIN: ES0000012O59), the on-the-run 10-year 3.20% Oct-35 Obli (ISIN: ES0000012P33) and the 4.00% Oct-54 Obli (ISIN: ES0000012M93). The auction size will be confirmed today.
• France will come to the market on Thursday, selling a combined E9.5-11.5bln MT OATs with both on the-run issues on offer as we’ve expected: the 2.40% Sep-28 OAT (ISIN: FR001400XLW2) and the 2.70% Feb-31 OAT (ISIN: FR001400Z2L7). Alongside these lines, France will be looking to sell the 0.75% May-28 OAT (ISIN: FR0013286192) and the 3.50% Nov-33 OAT (ISIN: FR001400L834).
• France will return later on Thursday to hold an IL OAT auction, with a combined E1.0-1.5bln of the 2.40% Sep-28 OAT (ISIN: FR001400XLW2), the 2.70% Feb-31 OAT (ISIN: FR001400Z2L7) and the 3.50% Nov-33 OAT (ISIN: FR001400L834) on offer.

NOMINAL FLOWS: This week will see redemptions of E36.1bln, most notably E17.0bln from a German Schatz, E14.0bln from an Italian CCTeu and E5.1bln from a formerly 10-year RFGB. Coupon payments for the week total E4.5bln of which E2.3bln are Italian, E1.0bln German, E0.9bln are Finnish and E0.2bln from the ESM. This leaves estimated net flows for the week at a negative E12.0bln, versus positive E25.4bln last week.