COMMODITIES: Tuesday's Cycle Low Reinforces Bearish WTI Futures Trend
A bearish theme in WTI futures remains intact and Tuesday’s fresh cycle low reinforces current conditions. The move down last week resulted in a break of support at $60.40, the Oct 2 low. This highlights an extension of the bearish price sequence of lower lows and lower highs and the move down opens $57.50 next, the May 30 low. On the upside, key resistance is at $66.42, the Sep 29 high. First resistance is at $62.30, the 50-day EMA. A bull cycle in Gold remains intact and this week’s extension reinforces current conditions. The move higher maintains the price sequence of higher highs and higher lows. Sights are on the $4300.00 handle next, and $4317.7, a Fibonacci projection point. Note that the trend is in overbought territory. A move down would be considered corrective and would allow the overbought set-up to unwind. Support to watch lies at $3919.6, 20-day EMA.
- WTI Crude up $0.5 or +0.86% at $58.8
- Natural Gas up $0.03 or +1.03% at $3.046
- Gold spot up $24.27 or +0.58% at $4232.18
- Copper down $4 or -0.8% at $497.6
- Silver down $0.14 or -0.26% at $52.8922
- Platinum down $0.46 or -0.03% at $1665.03
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GERMAN AUCTION PREVIEW: E4.5bln Of 2.20% Oct-30 Bobl On Offer This Morning
Germany will sell E4.5bln of the 2.20% Oct-30 Bobl this morning, the first re-opening of this line following the August launch. The August launch attracted a 1.93 bid-to-cover ratio and a 1.47x bid-to-issue ratio for the E4.5bln on offer.
- Benchmark Bobl yields have traded in a contained ~15bp range since the end of July, with the 2.20% handle containing downside price action as expectations that the ECB has reached (or is very close to) its terminal rate are cemented.
- Goldman Sachs “expect a migration of bearish pressure from the long-end towards the belly of yield curves with 5y underperforming in EUR and JPY”. In the EUR complex, this view reflects an expectation for markets to gain confidence in Germany’s better growth outlook. As a result, Goldman see “better macro value in 2s5s and 2s10s steepeners vs the hitherto successful 5s30s and 10s30s”.
- Timing: Results will be available shortly after the bidding deadline closes at 1030BST.
SONIA OPTIONS: Ratio Call Spread vs Put
SFIZ6 97.25/97.75cs x5 vs 96.25p x1, bought the cs for 3 in 1.75k (8.75k x 1.75k).
EURIBOR OPTIONS: Put Ladder seller
ERZ5 98.00/97.875/97.75p ladder, sold at 3.75 in 5k.
