REAL ESTATE: Sagax (Baa2 Stable) Q1 25

• In the equity space, S&P E-Minis continues to trade in a volatile manner and have recovered from yesterday’s low. A bearish theme remains intact and the latest fresh cycle lows, strengthen current conditions. Scope is seen for an extension towards the 4800.00 handle next. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Initial firm resistance is seen at 5610.64, the 20-day EMA. Gains are considered corrective.
• EUROSTOXX 50 futures remain in a bear cycle following the latest impulsive sell-off. Monday’s move down resulted in a breach of a key support at 4699.00, the Nov 19 ‘24 low (cont). This exposes 4372.46, the 76.4% retracement of the Oct ‘23 - Mar ‘25 bull cycle. The contract is oversold, a recovery would allow this condition to unwind. Initial resistance is 4910.00, Monday’s high.

Today’s 77 tick range in Bund futures pales in comparison to the prior two sessions, with risk sentiment showing signs of stabilising amid a lack of further escalation in trade tensions – for now. Bund futures are -43 ticks at 129.93, after finding support at the 50-day EMA of 129.83. A move to fresh intraday lows (below 129.81) would expose firm support at 129.15, the 20-day EMA.

• German paper underperforms Gilts, particularly at the short-end, following dovish commentary from ex-BOE officials earlier today.
• The 2-year Gilt/Schatz spread is 11.5bps tighter at typing, with the 10-year spread 4.5bps narrower at 196bps.
• The 2.50% Feb-35 Green Bund auction saw somewhat weaker bid-to-cover and bid-to-offer ratios than the previous re-opening in January, and may have weighed on futures in the run-up to the 1030BST bidding deadline.
• Conventional supply from Austria and the Netherlands has also passed this morning, while the spread has been set at today’s dual tranche EU-bond syndication.
• ECB’s Simkus offered support for a 25bp cut in April (which is essentially fully priced in OIS), while Stournaras provided familiar dovish rhetoric. De Guindos’ tone was less committal, but he nonetheless considers the latest US tariffs as a “paradigm shift”.
• 10-year EGB spreads to Bunds have tightened on the back of the stabilisation in risk, but markets remain highly sensitive to US tariff developments.