BTP TECHS: (U5) Still In A Corrective Cycle

• A small gap higher for Bund on the Overnight Open, but this has been closed going into the European session, with the contract testing session low following the Cash Open.
• While the Israel-Iran conflict is at the forefront, the impact on Markets have lessen, as Investors await for Concrete moves, Changes, but expect plenty more headlines on further strikes from both Countries.
• Trump's earlier post on Macron won't be helping relations, but Tariff News going forward are the near term concerns for Global Markets.
• Bund is sticking to a limited range in very low volumes, initial support is also unchanged at 130.12.
• Resistance moves back down to 131.00 initially.
• Today on the Data front sees, German ZEW, US Retail Sales and IP.
• SUPPLY: UK £4.5bn 2030 (equates to 21.3k Gilt) could weigh, German 2029, 2033 green Bonds (equates combined to 6.6k Bund) too small, won't impact Bonds, US Sells $23bn of 5yr TIPS reopening, shouldn't impact Treasury Futures.
• SYNDICATION: EU 2039 3.375% Tap.
• SPEAKERS: ECB Villeroy, Centeno.

The Swedish LFS unemployment rate surprisingly rose to 9.0% in May, above the 8.6% consensus and last month’s 8.5% reading. The LFS data can be volatile, so it’s important not to put too much stock in individual monthly outcomes. The 3mma of the unemployment rate was steady at 8.5%, so is still tracking below the Riksbank’s Q2 forecast of 8.8%. The Riksbank will present updated projections in tomorrow’s June MPR. Despite this, there certainly isn’t enough in the report to push back on expectations for a 25bp cut tomorrow. 

• Employment fell 0.5% M/M (vs 0.0% prior), but 3m/3m growth remains positive at 0.6% (vs 0.7% prior). The 3mma employment rate at 69.2% tracks above the Riksbank’s 68.8% Q2 forecast. However, we continue to be cognizant of softer forward-looking employment signals in the Economic Tendency Indicator.
• The participation rate ticked up a tenth to 75.8% in May, while the inactivity rate fell to 24.2% (vs 24.3% prior).
• In its latest labour market forecast, the Public Employment Services wrote that “the recovery in the labor market is expected to be slower than previously estimated. The economic turmoil in the world is dampening both consumption and investment. Households continue to hold tight to their wallets. But there is hope for improvement. We see some optimism among employers, especially in the longer term. We predict a gradual decrease in unemployment in 2026”

• RES 4: 122.71 2.764proj of the May 14 - 20 - 21 price swing
• RES 3: 122.35 2.500 proj of the May 14 - 20 - 21 price swing 
• RES 2: 122.00 Round number resistance
• RES 1: 121.73 High Jun 13
• PRICE: 121.04 @ Close Jun 16 
• SUP 1: 120.35 Low Jun 16      
• SUP 2: 119.48 Low May 26 
• SUP 3: 118.87 Low May 21  
• SUP 4: 118.51 Low May 14 and key support 

The trend condition in BTP futures is unchanged, it remains bullish and the latest pullback is considered corrective. Fresh cycle highs last week reinforce a bull theme and maintain the price sequence of higher highs and higher lows. Sights are on the 122.00 handle next. Key support to watch lies at 118.51, the May 14 low. A clear break of this level would highlight a reversal. First support is 120.35, Monday’s low.