BOBL TECHS: (U5) Tops First Resistance

• RES 4: 5486.00 High May 20 and a key bull trigger  
• RES 3: 5456.00 High Jun 11 
• RES 2: 5403.00 High Jun 12 
• RES 1: 5366.00 High Jun 30    
• PRICE: 5314.00 @ 06:43 BST Jul 7 
• SUP 1: 5194.00 Low Jun 23 and a bear trigger    
• SUP 2: 5182.00 Low May 2 
• SUP 3: 5100.94 38.2% retracement of the Apr 7 - May 20 bull leg
• SUP 4: 5078.00 Low Apr 30  

Short-term trend signals in Eurostoxx 50 futures remain bearish, however, the recovery from the Jun 23 low still appears to be a reversal and the contract is holding on to its most recent gains. Price has pierced both the 20- and 50-day EMAs. A clear break of both averages would strengthen a reversal theme. This would open 5486.00, the May 20 high and bull trigger. On the downside, a breach of 5194.00, the Jun 23 low, reinstates a bearish theme.

Swedish June flash inflation is due at 0700BST/0800CET. Although no details are provided in the flash release, markets will still be sensitive to the CPIF ex-energy reading given an August Riksbank cut remains in the balance. A string of weak growth data since the Riksbank’s dovish June 18 decision has weighed on the SEK, with EURSEK now trading above its 200DMA for the first time since February. Initial resistance, which will be in focus if inflation prints on the soft side, is 11.3203 (76.4% retracement of the March – April selloff).

• The Riksbank projected CPIF-ex energy at 2.86% Y/Y in the June MPR (vs 2.47% prior). The median analyst projection is now in line with this view (it was 3.0% Y/Y in Friday).
• The acceleration in underlying inflation compared to May is not expected to be a “concerning” one though: Higher prices on volatile airfares and package holidays (the latter of which has a much larger weight in the basket compared to 2024) are seen as the main drivers, alongside an unwind of temporary services softness in May.
• Unfortunately, the lack of detail in the flash won’t allow for any inspection of the underlying drivers until the final release on June 14th.
• Elsewhere, there is an expectations that core goods will be pulled lower by the start of summer sales, with the strong SEK also set to weigh on imported goods inflation.
• The acceleration of food inflation was a worry earlier this year, but leading indicators (e.g. PPI, business price plans) have rolled over in recent months.

• Germany will return to the market on Wednesday to hold a 15-year Bund auction. E1.5bln of the on-the-run long 15-year 2.60% May-41 Bund ISIN (DE000BU2F009) will be on offer alongside E1.0bln of the 2.50% Jul-44 Bund (ISIN: DE0001135481).
• Portugal will potentially come to the market on Wednesday with a combined E1.00-1.25bln of the long 6-year 0.30% Oct-31 OT (ISIN: PTOTEOOE0033) on offer alongside the off-the-run short 30-year 1.00% Apr-52 OT (ISIN: PTOTECOE0037).
• Italy will look to hold a 3/7/15+ year BTP auction on Friday with details to be confirmed tomorrow. We look for a launch of the new 3-year BTP maturing 15 January 2029 alongside a reopening of the on-the-run 7-year 3.25% Jul-32 BTP (ISIN: IT0005647265). We don’t have a strong view surrounding the 15+ year BTP that will be on offer.

NOMINAL FLOWS: This week sees E4.4bln of redemptions, most notably E3.5bln of a formerly 8- year EFSF bond and E0.8bln of a formerly 10-year CROATE. Coupon payments for the week total E0.5bln of which E0.3bln are from the EU and E0.2bln from the EFSF. This leaves estimated net flows for the week at positive E24.5bn, versus negative E29.9bln last week.