RIKSBANK: Short Q&A Session, No New Revelations

The 10-year Gilt/Bund spread has narrowed 2bps to 162.5bps, with UK paper outperforming German counterparts following this morning’s UK labour market data. Although wage pressures were broadly in line with consensus, the quantities side of the labour market continues to soften. 

• 10-year Gilt yields are now down 4bps today at 4.359%, having pierced trendline support drawn from the November 2022 lows. Next support is the Jan 14 low at 4.336%
• Bund yields are down 2.2bps to 2.73%, taking cues from overnight moves in USTs and JGBs rather than any regional driver. The February German ZEW survey saw a weaker than expected expectations component (58.3 vs 65.2 cons, 59.6 prior), but this wasn’t a market mover.
• Both the UK and German curves have bull flattened on the session.
• In futures, Gilts are +38 ticks at 92.30. Initial resistance is the Jan 19 high at 92.51. Bund futures are +19 ticks at 129.39, with key resistance noted at the Nov 26 high of 129.55.
• 10-year EGB spreads to Bunds are within 0.5bps of yesterday’s closing levels. No material underperformance in RAGBs on reports that Austria is set to activate its National Escape Clause for defence spending.
• The UK is holding two tenders today, while Germany and Finland are holding conventional auctions in the EGB space.  Croatia is holding a syndication for a new 10-year benchmark.

A bull cycle in WTI futures remains intact. However, the move lower from the Jan 29 high continues to highlight a corrective phase. Attention is on support at the 20-day EMA, at $62.61 (pierced). The 50-day EMA lies at $60.95. A clear breach of the 50-day average would highlight a stronger reversal and open $58.53, the Jan 20 low. Key resistance and the bull trigger has been defined at $66.48, the Jan 30 high. Clearance of it would resume the uptrend. Recent gains in Gold highlight a retracement of the Jan 29 - Feb 2 sell-off. The next two resistance points to monitor are $5139.9 and $5314.0, Fibonacci retracement levels. Note that the sell from the Jan 29 high continues to highlight a potential top in the L/T trend and from a S/T perspective, an unwinding of the recent overbought condition. A resumption of bearish activity would refocus attention on $4403.0, Feb 2 low.

• WTI Crude up $0.6 or +0.95% at $63.45
• Natural Gas down $0.13 or -4.04% at $3.108
• Gold spot down $56.63 or -1.13% at $4936.21
• Copper down $8.3 or -1.42% at $577.7
• Silver down $1.67 or -2.18% at $74.9726
• Platinum down $36.71 or -1.8% at $2008.48

The medium-term trend condition in EuroStoxx 50 futures is unchanged, it remains bullish and the latest pullback appears corrective - for now. The contract has pierced the 6100.00 handle. A clear breach of this hurdle would open 6134.00, a Fibonacci projection point. Key support to watch lies at the 50-day EMA, at 5908.77. Clearance of this average would highlight a short-term top. A sharp sell-off on Feb 12 in S&P E-Minis reinstates a potential bearish threat leaving key resistance at 7043.00, the Jan 28 high and bull trigger, intact for now. Attention turns to the key support at 6751.50, the Feb 6 low, where a break would highlight a top and a stronger short-term reversal. This would open 6691.56, a Fibonacci retracement point. Initial resistance to watch is at 6919.38, the 50-day EMA.

• Japan's NIKKEI closed lower by 239.92 pts or -0.42% at 56566.49 and the TOPIX ended 25.83 pts lower or -0.68% at 3761.55.
• Across Europe, Germany's DAX trades higher by 64.31 pts or +0.26% at 24865.74, FTSE 100 higher by 51.21 pts or +0.49% at 10524.76, CAC 40 up 17.28 pts or +0.21% at 8333.78 and Euro Stoxx 50 up 12.62 pts or +0.21% at 5991.5.
• Dow Jones mini up 9 pts or +0.02% at 49577, S&P 500 mini down 9 pts or -0.13% at 6841.5, NASDAQ mini down 114.75 pts or -0.46% at 24688.75.