REFINING: Shanghai Petrochemical Refinery Temporarily Shuts CDU

Citi note that “EGB spreads shrugged off the hawkish ECB cut and neutral risk-asset behaviour last week to extend their tightening”.

• They suggest that “while BTPs look rich vs other risk assets (and our fair value model), we suspect they are going through a regime change in shedding some of the legacy risk premium. This might have more to go, and any near-term consolidation and the impact of elevated NCR in coming months might give way to 10-Year BTP/Bund spread reaching 75bp over the course of ‘25”.

• RES 4: $38.000 - Round number resistance  
• RES 3: $37.195 - 2.236 proj of the May 15 - 22 high / low price swing
• RES 2: $36.987 - 1.000 proj of the Apr 7 - 25 - May 15 price swing
• RES 1: $36.712 - 2.000 proj of the May 15 - 22 high / low price swing 
• PRICE: $36.283 @ 08:06 BST Jun 9 
• SUP 1: $33.967 - Low Jun 3
• SUP 2: $33.147/31.651 - 50-day EMA / Low May 15
• SUP 3: $30.915/28.351 - Low Apr 11 / 7 and the bear trigger  
• SUP 4: $27.686 - Low Sep 6 ‘24  

An impulsive bull wave in Silver remains in play and last week’s strong gains reinforce this condition. The metal has recently cleared a number of important resistance points. Thursday’s rally resulted in a move above $34.903, the Oct 23 ‘24 high and a key bull trigger. The clear break of it marks an important medium-term bullish development. Sights are on $36.712 next, a Fibonacci projection. Initial support to watch lies at $33.967, the Jun 3 low.

• The Italian BTP futures is leading the gains in EGBs here, but the contract is still short of Friday's high, although the small resistance is seen at 121.04.
• Regardless, the price action has put the BTP/Bund another 1bp tighter, and could be set to test the big Psychological 90.00bps level, printed a 90.4bps low in 2021, its lowest since Mid March 2015.