US 10YR FUTURE TECHS: (U5) Holds Ground
- RES 4: 113-23 76.4% retracement of the Sep’24 - Jan’25 sell-off
- RES 3: 113-07 76.4% retracement of the Apr 7 - 11 sell-off
- RES 2: 112-23 High May 1
- RES 1: 112-15+ High Aug 5
- PRICE: 112-00 @ 08:36 BST Aug 13
- SUP 1: 110-19+/08+ Low Jul 24 / Low Jul 14 & 16
- SUP 2: 110-03 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 3: 109-28 Low Jun 6 and 11
- SUP 4: 109.25 Low May 27
Treasury futures spiked sharply on the CPI print, hitting 112-06 before fading into the close. Despite the intraday reversal off highs, the bullish theme persists, supported by the clearance of the bull trigger at 112-12+, the Jul 1 high, on the NFP reaction. Prices remain toward the upper-end of the range, keeping the May 1 high at 112-23, the next upside level. Clearance here opens retracement levels layered between 113-07 and 113-23. On the downside, key support is 110-08+, the Jul 14 and 16 low. First support lies at 110-19+, the Jul 24 low.
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GERMANY: Sufficient Headroom To Accommodate Spending Hike: Fitch
On Friday, Fitch affirmed Germany’s sovereign rating at AAA, Outlook Stable. Fitch believes that “Germany has the fiscal headroom to accommodate the planned hike in spending, with debt still well below the 80% peak reached in 2010. The country has a long record of fiscal prudence, and we expect a broad commitment to public finance sustainability to remain an important anchor for its 'AAA' rating”.
- “There is strong demand for its debt and financing costs…continue to be favourable compared with other large economies…Nevertheless, the shift in fiscal focus increases longer-term fiscal risks, in particular if the spending increase is not eventually offset by consolidation measures or a lasting improvement in growth prospects”.
- Fitch also caveat that despite fiscal/debt financing strengths, “Germany faces several structural challenges, including a rapidly ageing population, which weigh on its growth prospects and put pressure on public finances”.
- “We forecast the general government deficit will be 3% of GDP in 2025 from 2.8% in 2024, as one-off measures boost revenue and offset our expectation of only a modest ramp up in investment spending”.
- “We forecast the deficit will rise more quickly to an average of 3.9% of GDP in 2026-2027 (a level last reached in the early 2000s, excluding 2020), with defence spending increasing by close to 0.3pp per year. This is consistent with reaching Germany's newly announced 3.5% NATO defence spending target by 2029”.
US TSY FUTURES: WN Blocked
Latest block trade lodged at 08:10:35 London/03:10:35 NY:
- WNU5 1.5K lots blocked at 115-17, looks like a buyer.
- DV01 ~$270K.
MNI: CHINA JAN-JUNE NEW LOANS CNY12.92 TRLN VS MEDIAN CNY12.72 TRLN
- CHINA JAN-JUNE NEW LOANS CNY12.92 TRLN VS MEDIAN CNY12.72 TRLN
- CHINA END-JUNE M2 +8.3% Y/Y VS MEDIAN +8.2%; END-MAY +7.9% Y/Y
- CHINA END-JUNE M1 +4.6% Y/Y VS +2.3% Y/Y END-MAY
- CHINA END-JUNE M0 +12.0% Y/Y VS +12.1% Y/Y END-MAY
- CHINA JAN-JUNE TSF CNY22.83 TRLN VS MEDIAN CNY22.43 TRLN
