GILTS: Softer Start As Global Supply & Equity Bid Weighs
Feb-12 08:18
Supply-related pressure and a bid in European equities weighs on core global FI markets, biasing gilts lower at the open.
- Futures pierce yesterday’s base, printing as low as 92.83.
- First support at the 20-day EMA (91.63), with the short-term bullish cycle still intact but losing some momentum.
- Yields 1-2bp higher across the curve.
- 10-Year spread to Bunds 1bp tighter at ~207bp, sticking within the multi-week 203.8-213.3bp closing range.
- Local media outlets dominated by the latest fiscal warnings, with the NIESR noting that the UK’s fiscal headroom will have been fully eroded when the new OBR forecasts are released next month. This increases the risk of further tax hikes and spending cuts, although isn’t a new line of thought.
- Hawkish drift in GBP STIRs as gilts soften. BoE-dated OIS showing 58bp of cuts through December vs. ~60bp early today. SONIA futures flat to -2.5.
- Looking forwards, comments from BoE MPC member Greene are due later today (15:00 GMT).
- On the supply front the DMO will come to market with GBP1bln of 0.625% Mar-45 I/L supply.
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EGB OPTIONS: Bund Put Spread seller
Jan-13 08:15
RXG5 130/129ps, sold at 20 in 4k.
USDCAD TECHS: Trend Structure Remains Bullish
Jan-13 08:14
- RES 4: 1.4674 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4424 @ 08:14 GMT Jan 13
- SUP 1: 1.4345/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4190 50-day EMA
- SUP 4: 1.4011 Low Dec 5
The trend set-up in USDCAD remains bullish and the recent move down is considered corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4345, the 20-day EMA, has recently been pierced. A clear break of the average would open 1.4190, the 50-day EMA.
SCHATZ: Swap related trade
Jan-13 08:13
Schatz Swap related trade, suggest Payer:
- DUH5 ~6.75k at 106.51.
