EQUITIES: This Week's Gain Reinforces Bullish EuroStoxx Theme
A bull cycle in Eurostoxx 50 futures remains intact and this week’s gains reinforce this theme. Key support lies at the 50-day EMA at 5863.24. A clear breach of this average would signal scope for a deeper retracement. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. The bull trigger at 6072.00, the Jan 14 / 15 high, has been pierced. A clear break would resume the primary uptrend. The trend in S&P E-Minis remains bullish. The recovery from Monday’s low suggests that a recent bear threat merely resulted in a short lived correction. Attention is on key resistance and the bull trigger at 7043.00, the Jan 28 high. A break of this level would confirm a resumption of the primary uptrend and open 7080.92, a Fibonacci projection. Key support and a bear trigger has been defined at 6814.50, the Jan 21 low.
- Japan's NIKKEI closed lower by 427.3 pts or -0.78% at 54293.36 and the TOPIX ended 9.74 pts higher or +0.27% at 3655.58.
- Elsewhere, in China the SHANGHAI closed higher by 34.465 pts or +0.85% at 4102.202 and the HANG SENG ended 12.55 pts higher or +0.05% at 26847.32.
- Across Europe, Germany's DAX trades lower by 38.11 pts or -0.15% at 24740.77, FTSE 100 higher by 95.62 pts or +0.93% at 10410.04, CAC 40 up 56.81 pts or +0.69% at 8236.31 and Euro Stoxx 50 up 0.88 pts or +0.01% at 5996.23.
- Dow Jones mini up 129 pts or +0.26% at 49481, S&P 500 mini up 6.25 pts or +0.09% at 6948.5, NASDAQ mini down 13 pts or -0.05% at 25440.75.
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EGBS: Bunds Pare Early Gains, Trend Condition Bearish
- The trend condition in Bunds remains bearish, with futures having pared early morning gains. Currently +5 ticks at 127.16, support and the bear trigger in Bunds is located at 126.75.
- The move away from today’s 127.31 high may have been a function of solid corporate supply and an uptick in European equities. Crude oil futures have been volatile, with markets still digesting the implications of the US’ special operation in Venezuela over the weekend.
- The German curve is bull flatter, with 30-year yields down 2bps. That leaves 5s30s down almost 2bps to 104.5bps. However, trendline support drawn from the April 2025 low remains intact.
- Long-end swap spreads are little changed. One focus for EUR rates markets in H1 is the impact of Dutch pension fund flows, with several funds having transitioned to a defined contribution scheme from January 1.
- 10-year EGB spreads to Bunds have unwound earlier narrowing, now up to +1bp wider on the session.
- In supply, Slovenia is holding a 10-year syndication today, and we remain on the lookout for start-of-year mandates from several Eurozone countries. Conventional auction supply kicks off tomorrow with Germany.
- This afternoon’s calendar includes the US ISM manufacturing report, with regional focus on tomorrow’s December flash inflation data from France and Germany.
Figure 1: German 5s30s Curve (Source: Bloomberg Finance L.P)
GERMAN T-BILL AUCTION RESULTS: 3/9-Month Bubills
| Type | 3-month Bubill | 9-month Bubill |
| Maturity | Apr 15, 2026 | Oct 14, 2026 |
| Allotted | E1.4bln | E1.14bln |
| Previous | E2.224bln | E2.372bln |
| Total sold | E2bln | E2bln |
| Target | E2.0bln | E2.0bln |
| Avg yield | 1.988% | 2.005% |
| Previous | 1.972% | 1.983% |
| Bid-to-cover | 2.56x | 3.41x |
| Previous | 1.09x | 1.42x |
| Bid-to-offer | 1.8x | 1.94x |
| Previous | 0.81x | 1.12x |
| Previous date | Dec 01, 2025 | Dec 01, 2025 |
GILTS: Yields Edge Lower As Geopolitics Dominate, 2s10s Nearer To '25 High
Gilts are a little firmer on the day, with wider core global FI off Asia/Friday lows.
- Geopolitical risks centred on the U.S. seizing Venezuelan President Maduro seemed to provide some background support for core global FI markets as European participants filtered in, with lower oil prices tied to a potential longer run uptick in Venezuelan crude also providing support (albeit with plenty of uncertainty evident on that front).
- However, the impending seasonal surge in both sovereign and corporate supply, coupled with a recovery from lows in oil markets, has limited the rally.
- Gilt futures +16 at 90.94. Key directional triggers remain at 90.50 & 91.93.
- Yields 2-3bp lower across the curve, bull steepening.
- 2s10s breaks above the Nov high (80.305bp), exposing the Sep high (83.794bp) which protects the ’25 top (84.583bp).
- A dovish drift seen in GBP STIRs alongside the move further out the curve. SONIA futures flat to +2.5, BoE-dated OIS pricing ~41bp of easing through year-end vs. ~39bp late Friday.
- UK lending data was a little firmer than expected.
- Final services PMI is due tomorrow, while the DMO’s ’26 supply schedule will get underway on Wednesday, via GBP4.25bln of the 4.125% Mar-31 gilt.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Feb-26 | 3.711 | -1.5 |
Mar-26 | 3.621 | -10.5 |
Apr-26 | 3.508 | -21.8 |
Jun-26 | 3.438 | -28.8 |
Jul-26 | 3.364 | -36.2 |
Sep-26 | 3.343 | -38.3 |
Nov-26 | 3.315 | -41.0 |
Dec-26 | 3.315 | -41.1 |
